[Senate Hearing 107-1058]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 107-1058

RAILROAD ADVANCEMENT AND INFRASTRUCTURE LAW OF THE 21st CENTURY-RAIL-21

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 1, 2001

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation


90-763              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
____________________________________________________________________________
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

              ERNEST F. HOLLINGS, South Carolina, Chairman
DANIEL K. INOUYE, Hawaii             JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska
    Virginia                         CONRAD BURNS, Montana
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
JOHN B. BREAUX, Louisiana            KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
RON WYDEN, Oregon                    SAM BROWNBACK, Kansas
MAX CLELAND, Georgia                 GORDON SMITH, Oregon
BARBARA BOXER, California            PETER G. FITZGERALD, Illinois
JOHN EDWARDS, North Carolina         JOHN ENSIGN, Nevada
JEAN CARNAHAN, Missouri              GEORGE ALLEN, Virginia
BILL NELSON, Florida
               Kevin D. Kayes, Democratic Staff Director
                  Moses Boyd, Democratic Chief Counsel
                  Mark Buse, Republican Staff Director
               Jeanne Bumpus, Republican General Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 1, 2001.................................     1
Statement of Senator Dorgan......................................     6
Statement of Senator Hollings....................................     1
Statement of Senator Kerry.......................................     3
Statement of Senator McCain......................................     1
Statement of Senator Smith.......................................     5
    Prepared statement...........................................     5

                               Witnesses

Biden, Jr., Hon. Joseph R., U.S. Senator from Delaware...........    14
Carper, Hon. Thomas R., U.S. Senator from Delaware...............    11
Dayton, Mark R., Deputy Assistant Inspector General, Department 
  of 
  Transportation.................................................    21
    Prepared statement...........................................    23
Durbin, Hon. Richard J., U.S. Senator from Illinois..............     9
Gramm, Hon. Phil, U.S. Senator from Texas........................     6
Hamberger, Edward R., President and CEO, Association of American 
  Railroads......................................................    45
    Supplementary Information....................................    46
    Prepared statement...........................................    50
Rutter, Hon. Allan, Administrator, Federal Railroad 
  Administration.................................................    18
    Prepared statement...........................................    19
Turner, Frank, President and CEO, American Shortline and Regional 

  Railroad Association...........................................    53
    Prepared statement...........................................    54
Warrington, George D., President and CEO, Amtrak.................    39
    Prepared statement...........................................    41
Wytkind, Edward, Executive Director of the Transportation Trades 
  Department, AFL-CIO............................................    56
    Prepared statement...........................................    58

                                Appendix

Capon, Ross B., Executive Director, National Association of 
  Railroad 
  Passengers, prepared statement.................................    63

 
                       RAILROAD ADVANCEMENT AND 
                    INFRASTRUCTURE LAW OF THE 21st 
                            CENTURY-RAIL-21

                              ----------                              


                       THURSDAY, NOVEMBER 1, 2001

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:30 a.m. in room 
SR-253, Russell Senate Office Building, Hon. Ernest F. 
Hollings, Chairman of the Committee, presiding.

         OPENING STATEMENT OF HON. ERNEST F. HOLLINGS, 
                U.S. SENATOR FROM SOUTH CAROLINA

    The Chairman. Good morning. If we could get started, we 
have two important Senators here and we have two other 
important Senators on their way, on Amtrak, and they are 
slightly delayed.
    I learned years ago, representing a public transportation 
system in the City of Charleston, the city bus system, that 
there is no way to make a profit. If there is a public 
transportation entity that is making a profit in the world, we 
ought to know about it. We subsidize the airlines and air 
travel, and we subsidize highways, but we balk at subsidizing 
passenger rail. In fact, there is something in the bill here 
that we need to repeal, that requires Amtrak to make a profit.
    Senator McCain and I have already worked together to 
address rail security needs. The bill was reported on the 
calendar, and we hope that it can be brought up next week. Let 
me yield to Senator McCain.

                STATEMENT OF HON. JOHN McCAIN, 
                   U.S. SENATOR FROM ARIZONA

    Senator McCain. Thank you, Mr. Chairman: I want to begin by 
thanking you for holding today's hearing on this legislation, 
which includes a number of funding proposals concerning rail 
passenger and freight transportation.
    I must go on the record for having little support for S. 
1530 as currently drafted. I want to thank the Chairman for 
directing our Committee's attention to these very important 
issues for consideration and debate. The Chairman's actions 
demonstrate how the legislative process is supposed to work. 
That is, a bill is introduced and a hearing is held to consider 
its merits and receive input from interested parties. 
Unfortunately, usually provisions are stuffed into 
appropriations bills and many times in conference with little 
debate or discussion or involvement of the authorizing 
committee. There are a number of expired--and I do not think 
Amtrak's authorization should be at the top of our agenda, 
given that Amtrak is currently authorized through the fiscal 
year 2002. There are a number of expired transportation-related 
programs under our Committee's jurisdiction that in my judgment 
should take precedence. These include: reauthorization of the 
hazardous materials transportation safety program, which 
expired in 1998; rail safety, which expired in 1998; surface 
reauthorization of the Surface Transportation Board, which 
expired in 1998; reauthorization of the Federal Maritime 
Commission, which expired in 1998, and reauthorization of the 
U.S. Maritime Administration, which expired in 2001.
    We, as we all know, passed the Amtrak Reform and 
Accountability Act in 1997, which requires Amtrak to run 
without Federal operating assistance no later than 5 years 
after the date of enactment, which is December 2, 2002. S. 1530 
would change that requirement and force the American taxpayer 
to continue supporting Amtrak financially without any 
expectation of improved service or fiscal accountability on the 
part of Amtrak. I assure my colleagues that was not our intent 
when we worked together to pass the 1997 reform law.
    What has Amtrak accomplished since the reform bill's 
enactment? Amtrak's press releases often boast about increased 
ridership and revenues. Unfortunately, those press releases 
never quite tell the full story. According to the General 
Accounting Office, any increase in ridership has resulted in an 
increase in expenses that outpace revenues.
    Moreover, Amtrak's debt load has tripled since the reform 
bill's enactment to over $3.3 billion and it has spent more 
than $4.4 billion in taxpayers' dollars during that same 
period. Despite repeated testimony by Amtrak officials this 
year about being on a ``glide path to operational self-
sufficiency.'' Amtrak entered into a creative agreement in June 
to mortgage a portion of Penn Station to obtain cash to allow 
Amtrak to continue operating past this summer. Clearly, our 
expectation for a new and improved Amtrak when we passed the 
reform bill in 1997 has not been realized.
    I believe that passenger rail can and should be a part of 
our nation's transportation system. I continue to question how 
it should be structured and managed, knowing that Amtrak has 
failed to meet even the lowest expectations for 30 years.
    I recognize that Amtrak appears to be working in some 
areas, like the Northeast. However, I do not believe it has 
demonstrated an ability to work in most other areas based on 
Amtrak's own data, which indicates that every one of its 41 
routes lose tons of money, with some routes losing hundreds of 
dollars per passenger.
    If the collective wisdom of Congress is to support rail 
passenger transportation in some manner, it is time to face up 
to the reality that Amtrak is a failed experiment and we need 
to completely restructure the current system instead of simply 
reauthorizing Amtrak as we know it. I hope today's hearing can 
be the beginning of an open and full debate about the future of 
rail passenger service in this country.
    I have also concerns over the freight rail funding 
provisions in the bill, particularly the proposal to increase 
the total obligation level permitted under the Railroad 
Rehabilitation Improvement Financing Program from $3.5 billion, 
a level I reluctantly agreed to during conference consideration 
of TEA-21, to $35 billion. While I understand there is great 
need for infrastructure financing in the freight rail industry, 
I cannot support placing such a financial risk on the American 
taxpayers.
    I would urge all my colleagues to go back to the debate in 
this Committee and on the floor of the Senate in 1997, when we 
reauthorized Amtrak and everything was going to be fine. Amtrak 
was going to be financially independent. We had no worries. All 
we had to do was bail it out one more time, which we have done 
repeatedly since Amtrak was created, and at that time the 
promise of full financial independence was going to take place 
within 3 years.
    Mr. Chairman, I hope we can have an open and honest debate. 
I hope that, if we are going to work to maintain a rail system 
in this country, we start getting a little realism about it and 
recognize that we have to fundamentally restructure this rail 
system unless it is going to be a continued hemorrhaging of 
taxpayers' dollars, as it has been for the last 30 years.
    The Chairman. Senator Kerry.

               STATEMENT OF HON. JOHN F. KERRY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Kerry. Mr. Chairman, thank you very much. I 
listened very carefully to my good friend John McCain, and he 
is a good friend, and we have worked together on an awful lot 
of things around here. As I listen to him I am kind of sort of 
struggling a little bit with the definitions. I think what is 
happening on the Amtrak issue is that we are kind of talking 
past each other a little bit. We need to find a way to 
understand what we are all talking about when Senator McCain 
says Amtrak is a failed experiment and we have to change or 
fundamentally reconstruct Amtrak as we know it.
    It sort of reminds me of the welfare debate. There were a 
lot of people who did not just want to change welfare as we 
knew it, but wanted to sort of get rid of the system. There 
were other people who legitimately wanted to change it, fix it. 
We did ultimately reform it.
    I would love to see what those people who oppose helping 
Amtrak really propose as a ``rail system'' and how much are 
they willing to support for what that will provide rail traffic 
where we have deemed we need it in America, because the 
problem----
    Senator McCain. Could I answer? The law that was passed in 
1997. I totally support it.
    Senator Kerry. Let me come to that. I am going to come to 
that, because what happens, Mr. Chairman, is when we talk about 
completely being financially independent, there is in that 
equation a requirement that is completely and totally and 
simply unrealistic with respect to any rail system on the face 
of this planet. Not one rail system anywhere operates like a 
business that is completely self-sufficient and profit-making, 
and the reason for that is that the people who ride on 
railroads that we want to have ride on railroads cannot afford 
to pay the ticket that the market price would set to pay for 
the capital costs of putting the rolling stock and fixing the 
rail and doing what you need.
    We have decided that rail is not just a business, it is a 
public function to some degree. It helps move people in cities, 
it brings workers who do not have the capacity through their 
pay to pay the sort of levels of fares that might be required 
to, quote, run it exclusively as a business, and what happens 
is, we are going down this road in America where we are saying 
one thing about Amtrak when it is, in fact, something else, and 
we are not treating it like what it is, or the way other people 
treat it in almost every other country in the world, so we have 
got to work through this fundamental contradiction, Mr. 
Chairman, and it is a fundamental contradiction.
    I agree with Senator McCain, there are places that may be 
served under it, or there may be components of the system that 
do not belong in a national system, or that cannot be part of a 
national system, or that are not well-served by rail. Maybe 
that is part of the reform effort, but the problem is that for 
years now the problem of those particular sectors or areas of 
the system have been used to defeat a proper allocation of 
resources to the other parts of the system that we know we 
need, that must function, and that could work better. The 
Northeast, for instance.
    My colleague from Arizona just said, I know that that is a 
good system. Well, folks, it still cannot run its trains at the 
rate those trains can go because we still have not invested in 
the tracks sufficiently to provide a rail bed that allows them 
to do it. That still prevents us from attracting people to ride 
the rails who could compete with the overclogged New York-
Boston, Boston-Washington, New York-Washington sector, so until 
we are realistic about what we want to have as a system, we are 
going to be dancing around this issue, I am afraid, and not 
dealing with the reality.
    Now, I am going to close, Mr. Chairman. In the 30 years 
since Amtrak has existed, we have invested a total of $35 
billion in it. In those same 30 years we have invested $300 
billion in our roads, and $160 billion in our airports, and 
until we are realistic about the needs of a decent rail system, 
even in America, which loves to fly places and loves to drive 
places, we are going to face this issue over the next years. We 
cannot do without it, and we need to fund it properly, but I 
agree with Senator McCain, we also need to decide how big it is 
going to be, and where it is worthwhile investing, versus where 
it is not. Let us make that decision, and let us get the rail 
system that should exist and does exist a proper chance to 
thrive.
    The Chairman. Senator Burns.
    Senator Burns. I have no opening statement, Mr. Chairman, 
but I just think there is one thing missing here in this whole 
debate, leadership, both from the administration and this 
country have not really looked at our transportation system and 
come with any kind of a vision where we want to be in 10 and 20 
years.
    What is going to be our transportation needs in the future, 
not today, because the policy we make today will not affect 
anything until about 20 years from now? Where do we want to be? 
What will our transportation look like in this country in 10 
and 20 years? There has been no vision statement or anything 
come from the Department of Transportation or anywhere that 
would lead us to believe we have to change policy, or to set a 
policy that will get us there in 20 years, so I am listening, 
and will have an open mind, and I thank the chairman for 
holding this hearing.
    The Chairman. Thank you. Senator Nelson.
    Senator Nelson. I am looking forward to the hearing.
    The Chairman. Thank you very much. Senator Smith.

                STATEMENT OF HON. GORDON SMITH, 
                    U.S. SENATOR FROM OREGON

    Senator Smith. Mr. Chairman, I do have an opening 
statement. It is fairly detailed, so I would like to include it 
in the record.
    The Chairman. It will be.
    Senator Smith. I echo what Senator Burns just said. I want 
to support Amtrak, but I do not know where we are going. I 
think we are being told that we have a national system when we 
do not. The investment is all essentially in one place, and I 
know we just need to decide what we want in this country and as 
it relates to rails, and that decision I have yet to feel 
comfortable with or to hear articulated, and so thank you, sir, 
for including this in the record.
    [The prepared statement of Senator Smith follows:]

   Prepared Statement of Hon. Gordon Smith, U.S. Senator From Oregon
    I want to thank Chairman Hollings for holding today's hearing on 
the important issues of rail passenger and rail freight transportation.
    Last May, in my capacity as Chairman of the Subcommittee, I chaired 
a hearing on the financial condition of the rail industry. It was a 
very informative hearing. In addition to representatives of large and 
small carriers, we heard from several prominent rail economists 
regarding the industry's financial condition and its projected 
infrastructure investment needs.
    In response to the information obtained from that hearing, I joined 
with Senator Breaux, the Subcommittee's new Chairman, in introducing S. 
1220, the Railroad Track Modernization Act. That bill was introduced in 
July and would authorize the establishment of a capital grant program 
for rehabilitating, preserving, or improving railroad track for 
regional and short line railroads. The program would be authorized at 
$350 million annually for fiscal years 2002-2004.
    Chairman Hollings has included the provisions of our bill in his 
legislation, S. 1530, and I look forward to working with him on this 
measure in the days ahead.
    Today's hearing will also include a discussion on Amtrak.
    I am a supporter of Amtrak. It provides a necessary transportation 
option in the West. Like other Members on this Committee, I support a 
national rail transportation system and will not support funding Amtrak 
only in the Northeast.
    I represent a State that has one of the most successful passenger 
rail corridors in the country. In Oregon, ridership has increased by 
35,000 in 2000, and has more than doubled since the beginning of 
service in 1994. And customer satisfaction is extremely high, although 
declining track conditions are beginning to adversely affect on-time 
performance.
    I believe that some immediate investment is needed to the existing 
infrastructure to improve the quality of passenger travel. Increased 
capacity is also required to accommodate additional trains needed to 
serve steadily growing ridership.
    I hope we can develop a proposal to restructure Amtrak in a manner 
that allows it to provide better service to my state and the entire 
nation.
    I recognize that Amtrak management is forced to contend with a lot 
of political arm twisting, even from Members of this Committee. Because 
of this reality, I think if we are serious about improving passenger 
rail service in this country, we should consider creating a task force 
like we did when we established the National Civil Aviation Review 
Commission. Of course, if we did this, we would then need to step up to 
the plate and implement recommended changes and not just let another 
Congressionally-directed report collect dust.
    Finally, I want to note that today is Administrator Rutter's first 
appearance before our Committee in his official role as Administrator 
of the Federal Railroad Administration (FRA). I want to welcome him 
before the Committee.
    I look forward to hearing from all of our witnesses and learning 
their recommendations for improving our nation's rail transportation 
system.
    Again, thank you, Chairman Hollings, for holding today's hearing.

    The Chairman. Thank you. Senator Dorgan.

              STATEMENT OF HON. BYRON L. DORGAN, 
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Dorgan. Mr. Chairman, I, too, support Amtrak, and I 
have just a slightly different view than some. I personally 
believe that we ought to have a national rail passenger system, 
and if it requires subsidies, as every other form of 
transportation does, then I support that. I think we have to 
abolish the self-sufficiency provision that exists in law. I 
know it is a matter of philosophy with some, but I frankly 
think that you have to have a system, a rail passenger system 
in this country that works, and it ought to be a national 
system, and I am perfectly willing, as a legislator, to support 
it with the funds that are necessary so that we have a system 
we are proud of, but at the moment we are headed towards a 
brick wall. This does not make any sense. We are headed towards 
a situation that we must resolve.
    I hope we will resolve it on the side of the Congress 
deciding that what had been done previously was not the right 
thing. We want a national system. We are willing to support a 
national system. We remove the self-sufficiency test, allow for 
substantial investments to be made to make this a system we are 
proud of and one that works for all of this country.
    The Chairman. Senators Gramm and Durbin have been waiting 
patiently. The Committee welcomes them. Senator Gramm.

                 STATEMENT OF HON. PHIL GRAMM, 
                    U.S. SENATOR FROM TEXAS

    Senator Gramm. Thank you very much. It is a great privilege 
for me to appear before the Committee. Senator McCain, Members 
of the Committee, what I would like to do very briefly is talk 
about the bill that is before us and how it relates to the bill 
we passed in 1997.
    I would like to review some numbers that I think are 
important, and then I think I would like to very briefly 
respond to Senator Kerry's challenge about what alternative you 
propose. Let me first say, as everyone has already noted, in 
1997 we not only debated self-sufficiency, Congress went on 
record, we passed a bill, the President signed it into law, and 
it is now the law of the land that Amtrak should achieve 
operational self-sufficiency by 2002.
    The bill before us, Rail-21, repeals that self-sufficiency 
requirement. It provides $1.2 billion in additional Federal 
funds. That boils down to $51 per passenger that will ride on 
Amtrak next year. It eliminates the redemption of nonvoting 
common stock. I would remind Members of the Committee that when 
Amtrak was put together, railroads contributed capital 
equipment and in turn they were given nonvoting common stock.
    This bill, by repealing, or basically forcing them to give 
up that common stock, I think one could argue whether it has 
value or whether it does not, that that is a taking. This bill 
would allow Amtrak for the first time to use GSA. I am not an 
expert on GSA, but I do not know of any other private entity 
that is allowed to use GSA procurement, and finally the bill 
has emergency provisions, but I guess it is my assumption, Mr. 
Chairman, that since you all have already passed an emergency 
bill, that that would be the proposal that would come to the 
floor, and I am going to talk about that very, very briefly.
    Let me first say that I do not see any evidence, and I 
think this goes back to what Senator McCain said, and the sort 
of challenge that Senator Kerry framed. I do not see any 
evidence that Amtrak is making any progress whatsoever toward 
the goal that we set in 1997.
    I have here expenses and revenues, and as you can tell by 
looking at this chart, a little progress was made in the first 
year under the bill. From 1997 to 1998 it is clear that there 
was a narrowing of the gap, but since that time, if anything 
that gap has widened, no evidence whatsoever to substantiate 
any claim that Amtrak is making progress toward the goal that 
you have set.
    Now, you can be for the goal or against it, but the bottom 
line is, the current system is not working, and I do not hear 
any debate about that. This is operating losses. This is 
affected by accounting to some extent, but again the pattern is 
that the rate in 1997 was over $750 million in operating losses 
at that point, and that number has grown in 2002.
    The most severe problem, however, it seems to me, that 
faces Amtrak is not net revenue, but gross revenue. The plain 
truth is that Amtrak has not developed any kind of national 
rider base, and I think the figure that is most alarming is 
that today, Amtrak carries 3/10ths of 1 percent, 3/10ths of 1 
percent of all inner city travelers in America. Outside the 
Northeast Corridor, Amtrak is not statistically relevant to 
intercity transportation in America. If you look at buses, for 
example, and most of us do not think of buses in the same way 
as a national transportation system--maybe we should, as 
Amtrak--Intercity buses carry 33 times as many people as Amtrak 
carries today.
    I want to say something very briefly about the security 
bill that has been reported from Committee, and I just point 
these numbers out, and I do think they say something, and you 
can debate what they say, the security provisions that we 
provided for buses, even though 33 times as many people ride 
the bus as ride Amtrak, cost about $200 million, and that is 26 
cents per passenger. For the airlines, our security bill cost 
$2.95 per passenger, and we are requiring the passenger to pay 
for that through a ticket tax.
    Senator McCain. Senator Gramm, can I interrupt? We have not 
passed anything for the buses yet. That is just a proposal. We 
have not done anything.
    Senator Gramm. Well, the number that we have been debating, 
I should say.
    In terms of Amtrak, if you look just at the narrowly 
defined security measures, it is $515 million in the bill that 
you all have reported, as I understand, and that comes out to 
$22.89 per passenger, which is approximately ten times the cost 
for airlines, and if you include these tunnel upgrades in it, 
that grows to a whopping $78.53 per passenger for security 
measures on Amtrak.
    Senator Kerry. Compared to?
    Senator Gramm. Compared to $2.95 for the airlines, and so I 
am just pointing out this huge difference.
    Now, there may be reasons for the difference, but I think 
obviously these are things that need to be looked at.
    Now, let me conclude by just briefly saying what I believe 
needs to be done about Amtrak. I believe that the idea that 
today we can have a national passenger rail system in America 
is an unrealistic idea. I think it is clear that passenger rail 
will work in areas where you have got large cities, where you 
have got short distances to travel, where you have got high 
concentrations of people.
    I think we made a mistake politically by believing people 
would support Amtrak only if they had Amtrak in their State. I 
think Amtrak in the Northeast Corridor and perhaps in the 
Midwest, and perhaps over time built on retained earnings of a 
successful system, where it can work on the Eastern Seaboard 
initially, might some day develop more of a national system, 
but I think if we are going to put more money into Amtrak, that 
we need to terminate the lines that have no success, or no 
potential for success whatsoever, and we need to focus on 
upgrading the part of the system that can be successful and 
that can be a source of earnings that can fund the rest of the 
system.
    Senator Kerry pointed out that we fund airlines and that we 
fund roads. Well, we do, but we do not provide operating 
subsidies for either, and we fund most of those things out of 
taxes that are imposed on jet fuel or gasoline.
    I personally, as a Member of the Senate from Texas--and we 
have a little Amtrak in Texas, and some people are very 
supportive of it, and I have people who tell me they like 
seeing the train come and they like seeing it leave, but the 
problem is, they do not ever get on it, and I would just like 
to say, as one Member of the Senate, you do not have to do 
something in my State for me to support it if I believe it is 
an important part of the fabric of the national system.
    I live in a State where people live far apart, and where we 
have a very competitive airlines. Thank God for Southwest 
Airlines. For your subsidy, annual subsidy for Amtrak in your 
new bill, I can virtually fly anywhere in Texas on Southwest 
Airlines.
    So I just would like to ask you, as the leader in Congress 
through the jurisdiction of this Committee, to look at focusing 
Amtrak on the areas where it works, and I ask Members of the 
Senate to support it not because they are going to benefit 
directly, but because having an effective transportation system 
in different parts of the country--those systems do not have to 
all be the same. We are all part of the same country. We are 
all to some degree receiving assistance through various 
Government programs, and you do not have to have Amtrak in 
every State in the Union to justify the Federal Government 
being involved in it, and that basically is the point I wanted 
to make, Mr. Chairman.
    Thank you.
    The Chairman. Senator Durbin.

             STATEMENT OF HON. RICHARD J. DURBIN, 
                   U.S. SENATOR FROM ILLINOIS

    Senator Durbin. Thank you very much, Mr. Chairman. Senator 
McCain, Members of the Committee, I appreciate the opportunity 
to be with you today. This hearing on this legislation could 
not be more timely. If Congress does not act, and act soon, I 
am talking about a reauthorization that addresses many of the 
issues of Senate bill 1530, then there is a serious question as 
to whether Amtrak can survive. I think that is the bottom line.
    I am here today, probably a bit of a surprise witness, 
because I am not from the Northeast Corridor, and yet I am a 
strong supporter of Amtrak. Amtrak means a great deal to 
Illinois and to the Midwest. In my home state we benefit 
greatly from Amtrak jobs and service. An average of 48 Amtrak 
trains are run each day from 30 different Illinois communities, 
on more than 1,000 miles of track. Ridership in my State 
exceeded 2.9 million during the year 2000. 2,000 people are 
employed in Illinois, involved in Amtrak in some respect.
    Let us remember how we got into the predicament we did. In 
1997 there were forces at work in Congress that wanted to 
eliminate Amtrak on the spot. They had never supported it. They 
wanted it to go away. It was a part of the contract with 
America, the big revolution, and as a consequence many of us 
were backed into a corner on the self-sufficiency question.
    We knew at the time it was totally unrealistic. There is 
not a rail passenger system in the world that is self-
sufficient, and yet we said we would try to meet that standard. 
We did it to keep Amtrak alive and hope that cooler heads would 
prevail before 2002 arrived. That is why Senate bill 1530 is so 
absolutely critical. We set an unrealistic standard here. As 
Senator Hollings said, we subsidize every form of 
transportation.
    Now, my friend the Senator from Texas said earlier there is 
no operating subsidy for airlines. Let me see, what was it, 2 
weeks ago, or 3 weeks ago, when all but one of us voted for an 
operating subsidy for airlines, $5 billion in grants and $10 
billion in loans because we knew how critically important air 
service was to the country. We stood up because we wanted to do 
what we could to put people back in airplanes to keep the 
airlines working, because we knew it was essential to our 
economy.
    Make no mistake, Amtrak is also essential, and if we lose 
sight of that in this debate, if we believe that we can 
literally walk away from Amtrak and some day recreate it, we 
are living in a fantasyland. Amtrak is here. It should be 
expanded. It should be a critical part of our future.
    Can Amtrak reach self-sufficiency by next year? I think it 
can, but you will not like what happens. Amtrak can reach self-
sufficiency at the expense of service to communities across 
America. I represent a State with a lot of small airports. I 
think we can put two staff members full-time on dealing with 
those small airports and their needs, because they realize how 
critical air service is to their communities.
    Now, imagine if you will for a moment your role as a 
Senator when they start closing Amtrak service in community 
after community. Imagine the mayors and the chambers of 
commerce and all the people involved coming to you and talking 
about the impact that it is going to have on the local economy, 
a legitimate concern, and to let Amtrak go away because of this 
trigger that was dreamed up in 1997, I think is extremely 
short-sighted.
    Senator Burns says, look to the future, and I think you are 
right, Senator, and I think if we look to the future, you ought 
to understand the role that Amtrak can play in that future. We 
ought to accept, as Senator McCain says, we ought to face 
reality, and here is what reality is.
    Number 1, Amtrak needs Government support. We provide 
support today for the airlines and airport services, we provide 
support for highways in so many different ways. Amtrak, the 
third leg on that stool, will also need Government support. It 
should have been capitalized adequately from the start. Had 
that happened, perhaps it would be at the point of operational 
self-sufficiency, but because they have had to go to the 
private market to borrow the money to get started, rather than 
to have the Government investment, it has created a problem 
which they just cannot overcome.
    I might also add that we have to acknowledge the fact that 
Amtrak is an important part of our economy as well. It is an 
important part of our future.
    Finally, let me say this in terms of the reality of Amtrak. 
How can we have an honest, meaningful debate about energy in 
America without Amtrak? How can we talk about moving toward 
energy self-sufficiency in America? We may never reach it. 
Especially if we eliminate one of the sources of travel that is 
so essential in this country. Do you think we are a better 
country by putting more cars on the road and taking people off 
the Amtrak trains? I do not think so.
    I think we are going to see congestion, pollution, more 
demand for oil, more dependency on the Middle East. It makes a 
lot more sense from where I am sitting for us to be talking 
about conservation measures and mass transit and other things 
that should be part of a comprehensive energy picture. To think 
at this moment in time, in light of what we are going through, 
that we would turn our back on passenger rail service and 
eliminate it, it is so short-sighted.
    This is not about nostalgia This is about the reality of 
transportation in America. I believe in my State of Illinois, 
if this bill passes and we move toward high-speed rail, 
doubling and perhaps increasing by even greaterfold the number 
of trains that are available, the speed of those trains, the 
quality of the trains that are offered, people will respond.
    We have seen this in the past. I have been a passenger on 
Amtrak since September 11. I am glad it was there. More and 
more Americans have used it because of their concerns. There 
was a moment in time when we thought that it was just unlimited 
in terms of people getting on airplanes. Well, that is not the 
case today. I hope it returns sometime in the future, but in 
the meantime, it is extremely short-sighted for us to walk away 
from this critical part of America's transportation picture.
    We cannot allow Amtrak and rail passenger service to become 
victims of September 11 in the current economy or any 
shortsightedness generated by this 1997 bill. We must reassess 
Amtrak in light of our national transportation needs, and in 
light of our efforts to reduce energy dependence.
    Thank you.
    The Chairman. The Amtrak passengers have finally arrived.
    Senator Biden.
    Senator Biden. I would yield to my colleague.
    Senator Carper. I am happy to yield to Senator Biden.
    [Laughter.]
    The Chairman. That is why I did that, Tom, because I have 
gotten used to juniority.
    [Laughter.]
    Senator Carper. In that case, I will go ahead.
    The Chairman. Senator Carper ought to be introduced as a 
former member of the board, and probably knows more about 
Amtrak than all of us.
    Senator Carper.

              STATEMENT OF HON. THOMAS R. CARPER, 
                   U.S. SENATOR FROM DELAWARE

    Senator Carper. I want to thank you for introducing S. 
1530. I want to thank you for your strong support for passenger 
rail service in our country, and to the other Members of the 
Committee for being here and bringing your passions and 
convictions to the table as well.
    Senator Durbin said this is not about nostalgia. Having 
said that, I want to start off with a bit of nostalgia. One of 
my favorite stories as a kid growing up was a story my Aunt 
Nell used to tell us, when she took a train from West Virginia 
to San Diego. It was a troop train full of soldiers and sailors 
and airmen on their way to fight a war on the other side of the 
world, and she was going to go get married in San Diego, and 
she did. She loved to tell us that story.
    Twenty-five years later, we were in another war. I was 
going to be in it, and some of us here were. I was on my way to 
San Diego, later to be stationed in California and spend some 
time in Southeast Asia. I did not take the train to San Diego, 
did not have any troop trains then. I drove my car on an 
interstate highway, and when I would go back and forth between 
California and my home, my family on the East Coast, I would 
fly.
    My Aunt Nell did not have those alternatives in 1943. We 
had them in 1968 and 1969, and that is what I did.
    A year or so later, some things happened here with respect 
to trains. The freight railroads, they went out of the 
passenger business. You all remember that, some of you do, and 
they got out in 1970 when Richard Nixon was President and the 
deal was struck that in return for providing some money, some 
cash infusion into the system, getting some stock out of it in 
return for turning over their equipment, in return for 
surrendering some real estate between Washington, D.C. and 
Boston, Massachusetts the freight railroads would get out of 
the passenger business.
    They also had to agree to let this new entity, Amtrak, use 
their tracks whenever Amtrak was operating outside of the 
Northeast Corridor, but that was the deal that was struck.
    I think at the time some people thought, well, there would 
be some early Federal subsidies, but in time those will go 
away, and this is an outfit that will make some money, or at 
least break even.
    The reason why the freights went out of the business after 
all those years was they were losing money, and instead of 
gaining ridership, they were losing ridership, and they wanted 
to get out of the business, and why 31 years ago people thought 
we would make money running passenger rail service I am not 
altogether sure.
    A lot has changed in the last three decades. We spent 
maybe--Senator Kerry said $35 billion. I hear it is actually 
closer to $20 billion in terms of operating subsidies, but we 
spend in operating subsidies close to $20 billion, we will 
spend close to that amount in 3 months to subsidize airlines 
that we have spent in three decades to subsidize and support 
Amtrak.
    In 1997, the reauthorization bill, self-sufficiency was 
imposed by the end of fiscal 2002. In the last couple of years, 
we have seen an increase in ridership and revenues. The numbers 
that Senator Gramm presented did not reflect 2001 ridership 
numbers or revenue numbers. The numbers are up both in 
ridership and revenues. That was up even before the tragedies 
of September 11. On-time performance in the Northeast Corridor 
is good and improving. New trains have been introduced. I think 
most of you have probably ridden the Acela Express trains. They 
are marvelous trains. They are trains that we can all be proud 
of. They are receiving just a wonderful passenger acceptance.
    The Amtrak of today is more passenger-driven, more market-
focused than Amtrak was in 1970 or in 1980, or in 1990 for that 
matter. The unions, the labor unions, the rail labor unions 
have been willing to trade some productivity gains in return 
for increases in pay in the last couple of years.
    Let me just mention a couple of other changes in the last 
three decades. Believe it or not, 75 percent of the people in 
America now live within 50 miles of one of our coasts. I will 
say that again. 75 percent of the people in America now live 
within 50 miles of our coasts. Like it or not, we face global 
warming, and like it or not, we face a quality of air which is 
not good for us or for our people.
    Today, we import about 56 percent of the oil that we use. 
The majority of the oil that we import goes to run our cars, 
trucks, and vans. Our highways and airports are congested not 
just in the Northeast Corridor, but all over the country, and a 
lot of the flights that go out of these congested airports are 
commuter flights less than 250 miles.
    Let me just lay out, Mr. Chairman, if I could a long-term 
strategy for Amtrak, and then I will stop. When I was on the 
board I served for 4 years from, I think, 1994 to 1998. The 
long-term strategy that seems to make sense to me is one that 
says, let us introduce a new breed of high-speed trains to the 
Northeast Corridor, what we call the Accela Express, and use 
those trains to generate cash, a profit, actually an operating 
profit that this next year will be about $200 million in the 
Northeast Corridor on a cash basis, $200 million. Let us use 
some of that money to subsidize some service elsewhere.
    When Amtrak runs out of the Northeast Corridor we are on 
freight tracks. We have to pay to use those freight tracks. The 
freights do not want Amtrak to be on their tracks. It makes it 
difficult to get places on time. Service is about 50 percent 
outside the Northeast Corridor. Amtrak came up with the notion 
that if Amtrak could carry things other than people on their 
trains, and charge good money for doing so, and run on their 
freight tracks, we could make some money, and if we could split 
that profit with the freight railroads, they could make some 
money too, and they would actually have an incentive to let 
Amtrak use their tracks and not be shunted off to the side and 
slowed down.
    Agreements have been struck with Burlington Northern and 
Santa Fe, CSX, Norfolk Southern, to actually do those things. 
It will have the opportunity to see if they work. Amtrak owns 
some valuable real estate. We can use that real estate in the 
Northeast Corridor to wheel electricity and to make money doing 
that. We can use that money to run fiber optic and make money 
to do that. Amtrak helps to run commuter services all over the 
country. They make money doing that. Amtrak can use their 
locomotive and passenger rail repair services to bring in other 
locomotives and passenger service from the commuter lines and 
make money to do that.
    And lastly--I do not know if you have every taken the auto 
train, but there are people who pay good money to ride from 
just south of Washington, D.C. to Orlando, Florida. We could 
run auto trains from the Midwest to Orlando, Florida, from the 
Midwest to Santa Fe, or from places on the West Coast, and 
people will pay money not just to get some place, but actually 
where the trip itself is in large part a vacation.
    Let me just close on this note, if I can. Senator Durbin 
said it well. Since the inception of Amtrak we have been 
starved for capital. We simply provide more operating subsidy. 
We have never made the capital infusion investments that are 
needed. Senator Biden and I were late today because the train 
that we were on was delayed because of signal problems. The 
reason why the train was delayed with signal problems is that a 
transformer blew out. There was nothing wrong with the train, 
nothing wrong with the locomotives, nothing wrong with the 
track. A transformer blew out. Railroads are inherently 
capital-intensive. We have never made the capital investment.
    I will close with this. The fellow who succeeded me on the 
Amtrak board was Tommy Thompson, then Governor of Wisconsin and 
now the Secretary of Health and Human Services.
    Senator Biden. He wishes he were back on the board.
    [Laughter.]
    Senator Carper. He would love to be back on the board, but 
Secretary Thompson, in talking about the need for capital 
investment for Amtrak, has espoused for years an idea that 
provide a source of revenue, earmark a source of revenue for 
Amtrak and say, that is it, this is what you have to work with. 
He suggested adding a 1/2 cent or a penny to the gas tax and 
say to Amtrak, that is it, you get no more Federal operating 
subsidy, no more Federal capital. That is the amount of money 
you have to work with, so run your railroad, and if we have 
that money, if Amtrak had that money they could build and run a 
railroad that we could be proud of.
    Thank you very much.
    The Chairman. Thank you. Senator Biden.

            STATEMENT OF HON. JOSEPH R. BIDEN, JR., 
                   U.S. SENATOR FROM DELAWARE

    Senator Biden. Thank you. I want to begin by thanking 
Senator Carper, because prior to his election I was the second 
most senior junior Senator in the United States Senate.
    [Laughter.]
    Senator Biden. I will just make a few comments. I know you 
are not going to have time for questions. I look at my friend 
John McCain, who I admire as much as any Member I have served 
with, and this is kind of like religion, this debate here. I 
mean, this is just like us talking about religion.
    Look, folks, everybody knows the truth here. If I can make 
some hackneyed analogies here, you know, this rail passenger 
service did not start from scratch, like the airlines started 
from scratch. You got a little bit of the history from my 
colleague here. We are going under. No one wanted any part of 
the passenger rail service. Everybody knew we needed it, so 
they cobbled together this thing back in the seventies to try 
to save something here.
    It would be a little bit like the dilemmas we have 
constantly, that Amtrak has thrown in its way, are the example 
that first of all we were held up on the track because the MARC 
train was ahead of us and we could not pass the MARC train, and 
then the signals, the transformer blew, and we all get shunted 
aside off the Northeast Corridor.
    The reason why I never take a train going home that 
originates in Richmond is I know it ain't never going to get 
there, because Chessie is not going to let it get there in 
time, because they are a pain in the neck in terms of the way 
in which they deal with it. If I could make an analogy, it is a 
little bit like saying, nothing flies to Phoenix until all the 
cargo is in, we are going to have a passenger system for air 
flights, but I tell you what, cargo gets first preference. 
Cargo gets first preference. Give me a break, guys. You guys 
would go nuts. You guys would go absolutely blinking nuts if 
that were the case. That is exactly what Amtrak inherited.
    If we started this over again we would not be doing it this 
way. When we passed this bill, I was against the passage of 
this bill. I stood on the floor of the Senate and said, there 
is no way they are going to achieve self-sufficiency. You have 
not given them the capital investment they need to do anything 
anyway to get going, just to get up and running, so it kind of 
works.
    My friend from Texas, he is really good, and he gave you 
that chart about expenditure, X number of people ride the bus, 
and why don't people ride the airplane. We are spending X 
number of dollars for security on Amtrak. Well, that is a 
little bit like saying, you know, take all the people in the 
United States of America, and look how much money we spent in 
security for Washington, D.C., compared to the population, 
relative to how much money we spent in all, pick any 30 States, 
and it will probably come down to everybody who lives in the 
District of Columbia has, per capita, 15, 20, 30, 50 times as 
much spent on security relative to them as somebody living in 
Peoria, Illinois.
    What does that have to do with anything? We are spending 
money for security based on where the worst thing that can 
happen to Americans. The number of trains, the number of people 
in the tunnels under New York City, built at the turn of the 
last century, is 350,000 people a day. There ain't no light. 
There is no ventilation. There is no escape routes. How many 
747's is that?
    And talk to the terrorists, talk to the people who study 
the terrorists. The ability to do phenomenal damage to large 
numbers of Americans is exponentially higher in those tunnels 
than any place else you can pick in America, including an 
airport.
    So let us get real here. The reason why you have got to 
spend that much more money per passenger is that much more 
damage can be done to America and Americans. You are not 
spending money for security for railroads in Dagsboro, 
Delaware, because it is not likely much is going to hit 
Dagsboro, Delaware, but it is possible that the tunnel that 
goes through Baltimore, built in 1873, that has no escape, no 
lighting, no way out, that when there was a normal fire, a 
normal, ordinary fire in the tunnel, it shut down Baltimore for 
close to 5 days, so as we say, give me a break with these 
statistics.
    Disraeli said, there are three kinds of lies, lies, damn 
lies, and statistics, and you just saw a version of it. I do 
not think Phil intended to mislead anybody. Technically he is 
probably right, specifically right. We are spending much more 
per passenger, but the damage able to be done to American 
citizens is exponentially higher in those areas.
    Now, look, I am going to end, but the self-sufficiency idea 
does not make sense. Every single time we have come up, and I 
have been doing this for 29 years, which should probably be a 
recommendation to my constituency not to vote for me again 
because I have not been very successful, but for 29 years, 
little things like, okay guys, we know how you are about 
highways. We understand it's not the NRA or the AMA, or any of 
these outfits with the big lobbyists. It is called cement, or 
as they say in some parts of my state, chement. It is about 
cement and blacktop.
    Now, look, there is a provision you all have in your states 
when you are in the highway bill. There is a little tiny piece 
of the highway money your Governors get that they are able to 
use for something other than building a highway, and you know 
what they can do? They can build a bicycle path with it. They 
can go out and build a bus route. They can buy buses. They do 
not have to pour cement. They do not have to put down blacktop.
    So I came along, little modest thing, and I said, look, I 
spoke to a bunch of the Governors. The Governors said, look, if 
we had the authority to use this limited amount of money that 
we get from the highway trust fund, if we just were able to use 
that, a little piece that allows us to build bicycle paths, or 
build dirt roads, or put bus routes in, if we could use that 
for passenger rail service, your Governor in Montana said you 
lost $6 million when they shut down the one State because why? 
You lost skiing traffic. Folks did not get on the train to go 
skiing in your State.
    Now, whether that is true or not, I do not know, but your 
Governor called me--this was 3 years ago--he said, look, just 
allow me, just allow me to take my portion of those rural--I 
think they are called rural highway funds that I can build a 
bicycle path with, and allow me to make a contract with Amtrak 
and say, Amtrak, if you put that train back on, I will pay you 
to make it worthwhile, which was something like $500,000. I 
forget the number, but much less than the $6 million you were 
losing. It seemed to me a simple proposition. The Governor is a 
pretty smart guy.
    Guess what? You all got calls from the highway lobby. Oh, 
no. Build a bicycle path, but my God, don't let the State--not 
the Federal Government, but the State make an independent 
decision on its own, through its own sovereign mechanisms, to 
be able to use one portion of their highway money that they can 
use to build a bicycle path to be able to--to be able to have 
Amtrak run a train through their State on a track that already 
exists.
    The reason I tell you that, this would not have solved 
Amtrak's problem, but it is evidence of the problem, Mr. 
Chairman. Nobody wants to help Amtrak. You got it. Whatever can 
be done to put this under from the highway boys and the 
airlines is something that is fine with them, just fine.
    Give me a rational reason why, under States' rights, under 
economic incentives, under any system, you would let a Governor 
build a bicycle path but you all will go out--not you 
personally, but I will go out on the floor and vote against an 
amendment that says, if the Governor wants to go to Amtrak 
sitting behind me and say, by the way, how much would it cost 
to run that one train through my State? I will pay you to run 
it through.
    And again, this is like religion. As I said, this is like 
arguing about the Reformation or something, because it is just 
frustrating. It is just frustrating.
    The one thing that we would be somewhat disingenuous if we 
suggested is either on the part of Amtrak, that they always 
gave it to you straight, because these guys are clawing just to 
hang on, man. They are about to go under. They are about to 
slide off the coast into the ocean.
    Or, secondly, that anybody really--did the Congress ever 
really give Amtrak even a remote shot, even a remote shot of 
making it, just a remote shot, and again, I do not want to 
overstate what would have happened to Amtrak and all the lines 
and numbers and revenues you are talking about if they were 
allowed to use the rural highway funds to contract with Amtrak. 
It is an illustration of the kinds of blockages you all have, 
or we have all put constantly in front of Amtrak, just flat 
out.
    Now a last point I will make. You know, when we built the 
interstate highway system, nobody suggested at the front end of 
that that all of a sudden we are going to come along and start 
an interstate highway between every major city in America, and 
we are going to start it all at once. That is not how it 
happened. What we did is, we took pieces, and we sat there and 
we said, okay, where is the most traffic, where is the place we 
are most likely to get usage, and we started building these 
pieces, and we linked the highway system together.
    What Amtrak is proposing--as I say, I associate myself with 
the remarks of my colleague from Delaware. What Amtrak is 
proposing with its high-speed rail program is to come along and 
say to you all, look, we are not going to do this all at once, 
but let us get one down here. We will get that moving and up 
and running, and we think the inner city rail can work here.
    If you take a look at the map, which I will not bore you 
with, there are pieces. They are stringing this together, just 
like we strung the interstate highway system together, and I 
ask you, can anybody envision the possibility that 25 years 
from now, on the West Coast, the East Coast, in the Southwest 
and the Northwest, that there is not going to have to be a 
significant, efficient passenger rail system to have America 
call itself a major industrialized Nation? Can anybody tell me, 
can anybody paint that picture for me?
    How many more planes can you put in the air? How many more 
can you get up there in my area? As I said, in my area now, but 
how about down in your area, in the south?
    So I do not know, guys, I just think--I think we should 
just bite the bullet here and all convert.
    Senator Burns. Senator, would you yield for a question? 
Have we ever gone to the States, those States that think Amtrak 
is very important, and asked them to use State funds?
    Senator Biden. Yes, we have. Tom, do you want to speak to 
that?
    Senator Carper. If I could, President George Warrington is 
here from Amtrak. He can give the actual number of States, but 
there are more than a dozen States, perhaps as many as 20 
States who use their own money to contribute in order to 
maintain, and that is--I talked earlier about the elements of a 
system that makes sense, high-speed corridors, use some of the 
cash generated out of the Northeast Corridor to support service 
elsewhere to these freight partnerships, use that real estate 
to wheel electricity and to run, but also the States. The 
States have an opportunity and an obligation, I think, if they 
want service, to contribute toward it.
    The Chairman. We have got two other very important panels. 
I suggest we hold our questions for the cloakroom.
    [Laughter.]
    Senator Biden. Mr. Chairman, thank you very much, I say to 
my friend John McCain.
    Senator Carper. Just one closing thought, if I could. As a 
member of the Amtrak board, I never opposed the requirement to 
meet operating self-sufficiency. I thought that that really 
provided a helpful discipline. Having said that, you cannot 
expect that kind of operating self-sufficiency without making 
the necessary capital investment. You have to have the capital 
investment if we are really going to have a shot at meeting 
operating self-sufficiency.
    The compromise on this issue might be something called an 
Amtrak Reform Council. If they make a finding, they can make it 
today or this week or this year, that Amtrak is not going to 
reach operating self-sufficiency by September 30, 2002, Amtrak 
has to begin liquidation proceedings at that time. It could be 
this month. That does not make a whole lot of sense, and one 
thing I would ask us to consider if we do not want to eliminate 
the requirement for a Federal operating subsidy, and I am not 
so sure we ought to, but what we ought to do is remove that 
trigger that is now in place that would trigger, even today, 
the liquidation of Amtrak. I do not think that makes much 
sense.
    Thank you, Senator.
    Senator Biden. Can I make one very brief comment for my 
friend John? John, if Amtrak goes under, I will move here and I 
will be here all the time.
    [Laughter.]
    Senator Biden. Thank you all very much.
    Senator Burns. We will hold your route open.
    [Laughter.]
    The Chairman. Thank you both very much, and we look forward 
now to panel number 2, Hon. Allan Rutter, the Administrator of 
the Federal Railroad Administration, and Mr. Mark Dayton, 
Deputy Assistant Inspector General for Rail.
    The Committee welcomes you both. We would ask that you try 
to encapsulate your statements if you can within the 5-minute 
period. The statements in full will be included in the record.
    Mr. Rutter.

        STATEMENT OF HON. ALLAN RUTTER, ADMINISTRATOR, 
                FEDERAL RAILROAD ADMINISTRATION

    Mr. Rutter. Chairman Hollings, Senator McCain, and Members 
of the Committee, thanks for the invitation to visit with you 
this morning. We provided a copy of our written testimony, and 
I would like to dispense with reading that as long as it is 
made a part of the record. Instead, I would like to make four 
points before I respond to questions.
    1. Amtrak faces serious financial challenges in the short 
term.
    2. September 11 proves to us that America needs an 
effective national passenger rail system.
    3. We applaud the Committee's action to enact legislation 
that addresses safety and security issues for Amtrak and for 
the rail industry in general.
    4. Given the short-term financial difficulties of the 
current passenger rail provider, we believe that 
reauthorization should happen sooner rather than later, and we 
are ready to help you begin that consideration.
    First, let me share with you some of the insights I have 
gained since taking office, participating in Amtrak board 
meetings, and reviewing Amtrak's financial data. Amtrak has 
significant financial hurdles in the short term. These 
difficulties begin with billions of dollars of backlog capital 
needs, but do not end there. Amtrak faces short-term challenges 
of over $500 million to ameliorate, through innovative 
financing, revenue enhancements and cost-cutting.
    I am convinced that these problems would be much worse if 
not for the leadership provided by George Warrington, and I 
hope you appreciate how hard he and his team are working. 
However, our views on the future of passenger rail are colored 
by our understanding of the financial challenges currently 
facing Amtrak, the roots of which are in large part outside of 
their making or their control.
    Second, I have read the comments of many of the Members of 
this Committee and of this body that one of the effects of the 
tragic events of September 11 is a realization that passenger 
rail services are a vital part of our Nation's transportation 
system. Secretary Mineta and I share this view, and are 
committed to preparing for a new national passenger rail policy 
in light of the necessity of a functional multimodal passenger 
transportation system.
    Third, I am grateful that this Committee took action a few 
weeks ago to report S. 1550, legislation to address safety and 
security issues for Amtrak and for the entire railroad system. 
The administration supports action taken to provide 
authorization for security needs on Amtrak's national system. 
We also support the need to address safety issues on rail 
tunnels in New York, Baltimore, and Washington, and look 
forward to working with Congress to find ways of leveraging 
local participation as we make safety improvements to those 
vital facilities. We also appreciate the Committee's trust in 
the Department in giving the Secretary an oversight role and 
establishing priorities for security, and in beginning 
construction on those tunnels, and I personally look forward to 
finishing the task you have assigned to complete an assessment 
of the security needs of the entire railroad system.
    Finally, given the seriousness of the financial condition 
of our national passenger rail provider, I agree with Secretary 
Mineta that we need to advance the reauthorization of Amtrak 
and not postpone it. We hope to join this Committee in 
addressing a fundamental reassessment of what our national 
passenger rail system should accomplish, how much we can 
afford, how those services will be delivered, and how to pay 
for such a system.
    I worry that authorizing significant capital programs for 
Amtrak will not solve the underlying problems it faces in the 
short term. I cannot sit here and pretend to have solutions in 
mind, but I also believe that we have to collectively address 
the bigger issues of passenger rail policy before creating 
capital funding programs for current rail services or for new 
state-led higher speed rail programs.
    In summary, my case is this. Amtrak has immediate financial 
needs that need attention. National passenger rail services are 
an important element in our national transportation system. The 
Committee has already done valuable work in addressing safety 
and security issues for the rail system, and we support an 
accelerated comprehensive debate on the future of national 
passenger rail service.
    Once again, let me express my gratitude for the opportunity 
to appear before you, and I look forward to answering any 
questions.
    [The prepared statement of Mr. Rutter follows:]

    Prepared Statement of Hon. Allan Rutter, Administrator, Federal 
                        Railroad Administration

    Mr. Chairman, Senator McCain and other Members of the Committee, I 
am honored to appear on behalf of the Department of Transportation and 
the Bush Administration to discuss the wide range of important 
railroad-related issues being considered in this hearing.
    The events of September 11 and their aftermath have demonstrated 
that the nation requires a safe, secure and flexible system of rail 
transportation that, along with the other modes in our national 
transportation system, provides the mobility of people and goods 
necessary to support our economy and national defense. There has quite 
rightly been much discussion in recent weeks on how to improve the 
safety and security of rail transportation. But the Administration is 
concerned that, in the environment of heightened legislative activity 
following September 11, many legislative initiatives are also being 
proposed that go far beyond immediate security and safety needs, such 
as equipment and operating expenses, and go to fundamental policy 
issues facing the future of several major rail-related programs. We 
would appreciate the opportunity to work with the Congress to develop 
our long- term policy options through more hearings and legislative 
debate. This, however, would likely require more time than is remaining 
in the first session of the 107th Congress.
S. 1550 ``Rail Security Act of 2001''
    On October 17, this Committee reported out S. 1550 to address 
security and safety needs within the rail industry. Mr. Chairman, I 
appreciate your leadership and that of Senator McCain in addressing 
long-standing issues related to passenger rail service that must be 
addressed regardless of whether the future holds a new model for 
passenger rail service in this country. I am pleased to tell you that, 
with a few modifications, the Administration can support the rail 
provisions of S. 1550 as the vehicle to address our most immediate rail 
safety and security needs.
    This legislation responds to important rail safety concerns by 
clarifying that the Secretary's authority with respect to rail safety 
includes the ability to address security issues as well. This should 
deter litigation over this issue and quickly end any that might arise. 
S. 1550 recognizes the changing nature of the rail industry and 
enhanced cooperation among railroads by expanding the authority of 
railroad police officers to enforce laws on properties of other 
railroads. S. 1550 also authorizes appropriations to upgrade the safety 
and security of Amtrak-owned tunnels on the Northeast Corridor and for 
systemwide safety and security upgrades on Amtrak. Eligible safety and 
security projects might include fencing and other means to control 
access to the railroad right-of-way, video monitoring of key bridges, 
tunnels and stations, measures to screen passengers and baggage for 
dangerous weapons and explosives, and overtime pay for Amtrak police 
and other personnel overseeing surveillance of railroad property and 
equipment. The Administration supports the concept of strengthening and 
improving the safety of America's rail system as embodied in these 
provisions of S. 1550, recognizing that funds would only become 
available through the appropriations process.
    However, S. 1550 also authorizes $254 million for other 
infrastructure improvements to the Northeast Corridor, including 
replacement of bridges and expansion of the train control system. These 
are part of Amtrak's large capital backlog, and must be addressed at 
some point. However, the Administration believes that these proposed 
improvements should be considered as part of the larger issue of how to 
meet the capital requirements of intercity passenger rail and the 
Northeast Corridor and not addressed separately as part of this 
legislation.
    The Administration appreciates the enhanced focus on security 
planning required by this legislation. The Federal Railroad 
Administration (FRA) welcomes the role of working with Amtrak to craft 
a meaningful system-wide security plan that will enhance the safety of 
rail passengers, rail employees and the communities through which 
Amtrak operates. I have already met with the leadership of Amtrak and 
the leadership of the Association of American Railroads to ensure that 
all reasonable and feasible measures to enhance security are 
identified. FRA will facilitate the ability of Amtrak and the freight 
railroads to access the latest expertise within the Federal Government. 
Working together, the Federal Government and the rail industry will 
make this form of transportation more secure.
    The Administration also appreciates that the Committee recognizes 
the role FRA can play in helping Amtrak define the most pressing of 
capital investments needed system-wide and on the Northeast Corridor to 
ensure that the security and safety upgrades are implemented as quickly 
as possible. In fact, earlier this week a team of FRA technical experts 
met with their counterparts at Amtrak to begin the process of reviewing 
the specifics of these contemplated projects, including the extent to 
which State, regional and local authorities will participate in the 
planning and funding of these projects.

Other Pressing Rail Issues
    Next to immediate security and safety needs, FRA sees the future of 
intercity rail passenger service as the most pressing rail issue 
requiring the attention of Congress and the Administration. The 
Department believes that there is an important role for intercity rail 
passenger service to play as part of our national transportation 
system. Intercity passenger rail has the potential to provide 
additional capacity and flexibility for our passenger transportation 
system. However, financial and other constraints inherent in the 
current system for passenger rail service in this country limit the 
ability of rail passenger service to fully achieve this potential.
    Amtrak faces the most profound financial challenge in its 30 year 
history. I recognize that Congress has heard such dire pronouncements 
in the past only to find that, with a little more money, Amtrak could 
struggle through to the next reauthorization debate. I wish to tell you 
that we have found that the challenge is real this time. Amtrak has and 
will, to the extent possible, continue to mortgage or sell assets to 
pay salaries, buy fuel and meet its other operating needs. But the 
available assets are down to a precious few. And each time one is 
converted to cash, that transaction reduces the flexibility and options 
that we, the Congress and the Administration, have in addressing the 
future of intercity passenger rail.
    The Administration and the Congress need to work together to 
identify the structural reforms and develop solutions that will result 
in a financially stable system that can help this country meet our 
mobility and national defense needs. We must address the issues of what 
the rail passenger transportation network should be, what we can 
afford, how it will be operated, and how it will be financed. The time 
to articulate our national passenger rail policy has come. The 
Department is totally committed to working with this Committee to 
develop that policy.
    There are many related issues before the Congress in pending 
legislation including bonds, either tax credit or tax free, to fund 
high-speed rail infrastructure and equipment investments; expansion of 
the Railroad Rehabilitation and Infrastructure Financing program to 
benefit passenger rail service; and new authorizations for high-speed 
rail research and development. The Administration believes that we 
cannot separate these issues from development of the fundamental 
national passenger rail policy and should not legislate on these issues 
until the Congress and the Administration have a shared understanding 
of that policy.
    We are now at the point that the intercity rail passenger 
reauthorization debate needs to begin. The Administration plans to 
include at the very least, an outline of a legislative initiative as 
part of President Bush's FY 2003 budget submission early next year. The 
Amtrak Reform Council should also be in a position to present its 
recommendations on ``an action plan for a restructured and rationalized 
national intercity rail passenger system'' at about the same time. No 
doubt other interested parties will have their own ideas. I would 
suggest that hearings on these proposals be held early in the next 
session with a commitment for Congressional action on intercity 
passenger rail service reauthorization before the Memorial Day recess.
    Mr. Chairman, this concludes my prepared remarks. I would be happy 
to elaborate on these points in response to any questions the Committee 
might have.

    Senator McCain. Thank you, Mr. Rutter. Mr. Dayton.

         STATEMENT OF MARK R. DAYTON, DEPUTY ASSISTANT
        INSPECTOR GENERAL, DEPARTMENT OF TRANSPORTATION

    Mr. Dayton. Thank you, Mr. Chairman, Members of the 
Committee. Thank you for providing us the opportunity to 
comment on Amtrak's security, safety, and financial issues. In 
the weeks following September 11, it has become clear this 
country needs safe and reliable alternatives to airline travel. 
Two weeks ago, this Committee unanimously approved S. 1550, 
which provided funding for some of our country's and Amtrak's 
most important safety and security needs.
    There are several aspects of that bill and the proposed 
Rail-21 legislation that I would like to comment upon today. 
These are funding for life-safety needs in the Penn Station, 
New York River Tunnels, Amtrak's immediate safety and security 
needs, and reauthorization of funding for long-term growth. We 
have repeatedly voiced our concerns about the fire and life-
safety needs in the Penn Station tunnels. Amtrak, Long Island 
Railroad, and New Jersey Transit have been making improvements 
since 1976, but their efforts so far have focused on preventing 
an emergency that would lead to a full-scale tunnel evacuation.
    On September 11, it became painfully clear that preventing 
against known risk is not enough. The life-safety facilities 
need to be brought up to standard in the Penn Station tunnels 
to assure that whatever the cost, evacuation and fire and 
rescue activities are not compromised. We therefore support 
providing the full amount, $898 million, to be available until 
expended. Project planning should be coordinated among all 
users, but developing and enforcing the cost-sharing program 
could mean delays in completing the projects.
    New Jersey Transit will have its hands full in the next few 
years accommodating commuters who relied on PATH train 
connections to the World Trade Center, and the New York MTA 
will need to focus on rebuilding subway lines damaged by the 
attacks. Without these life-safety improvements, the lives of 
passengers, railroad employees, and rescue personnel continue 
to be placed at unnecessary risk.
    Amtrak also estimates it will need approximately $61 
million this year to fund heightened security operations. These 
expenses include hiring new police and security officers, 
adding canine units for bomb detection, and increasing 
inspections of track and other facilities. Amtrak also 
estimates that it needs approximately $454 million in funds for 
capital projects to increase system-wide safety and security. 
These projects include improving lighting and security fencing, 
implementing the passenger information tracking system, 
purchasing hazmat and bomb detectors, and developing a railroad 
incident command center.
    If funds are provided for these projects and for the tunnel 
lighting safety program, they should be earmarked for specific 
projects, and Amtrak should be held accountable for their use. 
These projects are too important to run the risk that these 
funds might be diverted for other uses. We believe S. 1550 
provides the appropriate departmental oversight for these 
funds.
    S. 1530 proposes extending Amtrak's authorization by 1 
year. We understand the intent of this provision, which is to 
allow robust national debate over the future of inner city 
passenger rail, but there are other options. The Amtrak Reform 
and Accountability Act contains a sunset trigger provision that 
is to be exercised by the Amtrak Reform Council if it finds 
that Amtrak will not meet its self-sufficiency mandate.
    This trigger sets a number of events into motion, including 
the accelerated development of restructuring and liquidation 
plans. Restructuring and liquidation ought to be considered, 
but as part of the broader debate on the future of inner city 
passenger rail. Decisions need to be made about how rail 
service will be delivered, where it will exist, by whom it will 
be provided, and whether and what aspects of service should be 
subsidized. Eliminating the sunset trigger will allow the 
Congress to hold this discussion according to its own 
timetable, not one driven by the reform act's 90-day clock.
    If the trigger provision is not eliminated, consideration 
should be given to extending the windows for developing and 
evaluating the restructuring and liquidation plans.
    I want to make clear that our support for repealing the 
sunset trigger does not imply that we support eliminating 
Amtrak's mandate for operational self-sufficiency. We do not. 
The mandate was a prime and possibly the prime policy decision 
in the last three authorizations. The trigger sections were 
strictly procedural mechanisms, however, to trigger what would 
amount to an early reauthorization process if the key policy 
goal was in jeopardy, and essentially to keep from throwing 
good money after bad if it did not look like Amtrak was going 
to make it.
    Now, in 2002, we are already in the reauthorization 
process, and leaving the trigger mechanism in place could 
unfortunately short-circuit the in-depth consideration of 
reauthorization issues that we think is needed.
    Along the same lines, until these longer-term decisions are 
made about the future of passenger rail, it is premature to 
establish funding for longer term needs. Amtrak is requesting 
$1.7 billion in funds to increase infrastructure and equipment 
capacity to meet increased demand. Providing funds now, whether 
through S. 1530 or one of the proposed bond bills, presupposes 
the answers to some of the questions that will need to be asked 
during the reauthorization debate.
    Mr. Chairman, this concludes my opening statement. I will 
be pleased to answer any questions.
    [The prepared statement of Mr. Dayton follows:]

   Prepared Statement of Mark R. Dayton, Deputy Assistant Inspector 
                 General, Department of Transportation

    Mr. Chairman, Senator McCain and Members of the Committee,
    On September 11, the safety, security, and reliability of our 
nation's transportation network was called into question. As airline 
service ground to a halt following the terrorist attacks on the 
Pentagon and World Trade Center, the need for reliable and safe 
transportation alternatives became apparent. In the intervening weeks, 
various bills have been introduced that propose ways to improve 
security and otherwise strengthen rail service. These proposals include 
provisions for both the short- and long-term security and safety needs 
as well as a variety of options for facilitating modal growth.
    Amtrak's authorization expires at the end of this fiscal year and a 
number of options need to be weighed concerning Amtrak's future and the 
future of intercity passenger rail. We expect that this debate will 
begin in the next few months and continue through the coming year. In 
the near term, however, it is imperative that the immediate needs of 
improving the safety and security of Amtrak's operations be addressed.
    S. 1550, which was voted unanimously out of this Committee on 
October 17, as well as S. 1530, the subject of this hearing, both 
contain provisions for meeting those needs. S. 1550 contains earmarking 
provisions intended to ensure that the funds are used for their 
requested purposes and not diverted to other needs. We have criticized 
Amtrak's capital investment strategy in the past, which has funded 
projects intended to improve its financial condition in lieu of 
projects necessary to sustain the reliability and basic integrity of 
its system. Earmarking the funds provided for Amtrak's safety and 
security needs would ensure that similar choices could not be made 
about how to use these funds. S. 1550 also gives the Department a 
critical oversight role--first in approving plans before Amtrak can 
spend the funds, and then in auditing their use.
    Rail-21 (S. 1530) also provides funds for Amtrak's projected 
longer-term needs, including increasing infrastructure and equipment 
capacity, as well as establishing loans and loan guarantee programs for 
a variety of rail projects. Funding of these provisions is premature. 
These provisions need to be considered, but should be evaluated as part 
of the larger context of the future of intercity passenger rail. 
Decisions need to be made about how rail service will be delivered in 
this country, where it will exist, by whom it will be provided, the 
appropriate role of States, and whether and what aspect of service 
should be subsidized and by whom. Approving provisions for long-term 
funding or capacity growth presupposes the answers to some of these 
questions.
    Amtrak's current authorization expires at the end of Fiscal Year 
(FY) 2002. Rail 21 proposes reauthorizing Amtrak with $1.2 billion in 
funds for FY 2003. We understand the benefit of such an action would 
provide the Congress with a broader window within which to conduct the 
necessary debate about the future of intercity passenger rail, but we 
think there is an alternative.
    The Amtrak Reform and Accountability Act (ARAA) established an 
operating self-sufficiency mandate for Amtrak by December 2, 2002. It 
also established and directed the Amtrak Reform Council to oversee 
Amtrak's progress toward this goal and to make a ``finding'' at such 
point that it believes Amtrak will not meet its mandate. Such a finding 
sets into a motion a series of events, including the accelerated 
development and Congressional review of restructuring and liquidation 
plans. As an alternative to reauthorizing Amtrak for 2003, we would 
propose eliminating this ``sunset trigger'' provision or extending the 
windows in which the required plans would need to be considered. This 
would prevent the reauthorization debate from being compressed into a 
schedule that is too narrow to give full consideration to the wide 
variety of issues that need to be addressed concerning the future of 
national passenger rail service.
    We also note that the funding authorized in S. 1530 represents 
Amtrak's early estimates for security and capacity-related expenses and 
capital needs. Amtrak has since revised its estimates to what it 
believes more accurately reflect its expected needs for safety and 
security-related projects. Our comments today refer to the revised 
estimates, which are also the figures reflected in S. 1550 that was 
voted out of this Committee on October 17. The following chart compares 
Amtrak's original (September 2001) and revised (October 2001) 
estimates.



    We appreciate the opportunity to comment on several aspects of 
Rail-21. These include:

   Fire and Life-Safety Needs in Pennsylvania Station-New York 
        (PSNY) Tunnels,

   Funding for Security Related Operating Costs and Capital 
        Improvements, and

   Reauthorization and Funding for Long-Term Growth Needs
Fire and Life-Safety Needs in Pennsylvania Station Tunnels.
    Both S. 1530 and S. 1550 provide full funding for the fire and 
life-safety projects in the Penn Station New York river tunnels. While 
these tunnels are shared by other users, we support providing the full 
amount, earmarked, to be available until expended. Joint planning on 
the program should be required, but developing and enforcing a cost-
sharing program between other tunnel users could mean delays in 
completing the projects. New Jersey Transit will have its hands full in 
the next few years accommodating commuters who relied on PATH train 
connections to the World Trade Center. The Metropolitan Transporation 
Authority (MTA) will need to focus funds and attention on rebuilding 
subway lines damaged by the attacks. Without the life-safety 
improvements, the lives of passengers, railroad employees, and rescue 
personnel continue to be placed at unnecessary risk.
    Eleven times in the past 2 years we have raised concerns about the 
long-standing fire and life-safety needs in the Penn Station New York 
river tunnels. Almost $900 million is needed to fully address these 
needs, including the installation of adequate evacuation and 
ventilation facilities. Amtrak and the other users of the tunnels have 
been investing in the life safety program since 1976, but their efforts 
have focused on prevention, such as keeping track, signals, and 
equipment in a state of good repair rather than emergency response. 
These investments may be effective in preparing for known risks, but it 
is unlikely that these efforts would have been satisfactory in 
responding to a terrorist attack. Prevention is a good first line of 
defense but it is clear that it cannot be the only one. It is essential 
that conditions are at least minimally adequate to preserve life in the 
event of a large scale emergency evacuation.
    Penn Station-New York (PSNY) is the busiest railroad station in the 
United States, with more than 750 trains and 500,000 transit, commuter, 
and intercity passengers passing through the station each weekday. The 
two North River tunnels \1\ and the four East River tunnels, completed 
in 1910, serve as a vital commuter link between New York City and the 
surrounding area.
---------------------------------------------------------------------------
    \1\ The North River tunnels are the two tunnels beneath the Hudson 
River that connect New York City to New Jersey.
---------------------------------------------------------------------------
    Narrow, winding, spiral staircases and crumbling benchwalls are 
inadequate to support the successful evacuation of what could 
potentially be thousands of passengers in the event of a serious tunnel 
fire or other emergency situation. Ventilation systems that cannot 
remove sufficient amounts of smoke or heat could further jeopardize the 
success of such an operation. The discussion of needs has focused to 
date on the likely outcome in the event of a serious tunnel fire. In 
December 2000, we noted that the same systems necessary to preserve 
life in the event of a fire--ventilation, communication, and adequate 
evacuation facilities--are essential to the effective response to other 
incidents unrelated to an equipment- or train-related fire, including a 
terrorist act or act of nature.
    On September 11, 2001, the terrorist attacks on the World Trade 
Center claimed thousands of lives both as a result of the initial 
airplane attacks and then the collapse of the towers as workers 
attempted to evacuate the building. We were especially saddened to hear 
that among the New York Firefighters who lost their lives on September 
11 were several Department officials who were instrumental in helping 
the OIG to identify the most critical safety needs in the PSNY tunnels. 
The Fire Department's concern--then and now--is that the firefighting 
and rescue facilities in the tunnels are not adequate to ensure that 
rescue personnel could safely and successfully perform their duties. 
The Commissioner wrote in November of 2000, ``Should a major fire or 
emergency occur, the skill, dedication, courage and commitment of [the 
Department's] firefighters may not be enough to prevent a catastrophic 
outcome.''
    The initial estimate for completing all projects on a compressed, 
accelerated schedule is $898 million through 2010. Although Penn 
Station and the tunnels are owned by Amtrak, New Jersey Transit and the 
Long Island Rail Road are also heavy users of the tunnels for their 
daily commuter operations. In the past, work in the tunnels and Penn 
Station has been jointly funded by all three entities. While joint 
funding may be the most equitable solution to addressing existing 
needs, it may not be the most efficient one. All three users have 
different funding cycles and mechanisms, and in the past, projects have 
been postponed when one or more entities have not able to meet their 
share of responsibility.
    It is our view that providing full funding earmarked for these 
projects is the best option for ensuring that these projects are done 
as quickly as possible. These funds should not be viewed as a financial 
benefit to Amtrak--these projects will have little impact on its 
financial condition--but rather, the direct beneficiaries of these 
funds are the more than half million individuals who pass through Penn 
Station and the tunnels daily. In fact, commuter traffic pattern 
changes since September 11 have increased traffic in the North River 
tunnels by 44 percent, with some trains operating at 40 percent over 
capacity.
    Quibbling over who pays what share, or what pot of money it comes 
from only prolongs the timetable for addressing these critical needs, a 
timetable which the Fire Commissioner of the City of New York describes 
as, ``completely unacceptable and a further exacerbation of problems 
that have gone uncorrected far too long.''
Funding for Security-Related Operating Costs and Capital Improvements
    Security Related Operating Costs. Although Amtrak asserts that its 
ridership numbers increased as a result of disruptions in air service 
following the September 11 attacks, unanticipated demand and additional 
security precautions caused expenses to grow commensurately. Amtrak's 
security officers and police worked overtime to provide additional 
security in stations and on board trains, and maintenance crews 
monitored vulnerable bridges and tunnel entrances 24 hours a day. 
Amtrak originally projected that the expenses associated with 
responding to the September 11 attacks would exceed revenues resulting 
from increased demand. Amtrak initially requested $77 million to cover 
this net expense. It has since revised its cost estimates downward and 
is now only requesting funds to cover expenses related to increasing 
its police and security forces and instituting new procedures.
    Amtrak now estimates that it will need approximately $61 million in 
operating assistance to augment its security personnel, police 
officers, and K-9 units; and to institute other permanent safety and 
security measures. The following chart identifies the estimated annual 
costs of permanent security-related improvements. These are new costs 
associated with augmenting existing security efforts.



    Clearly, the level of security-related operations necessary to 
ensure the safety of its services will strain Amtrak's already tight 
operating budget. Amtrak's annual cash losses are already at a level 
that it will find difficult to cover through existing resources. It 
would be unfortunate if Amtrak's decisions concerning whether, and to 
what extent it chooses to increase the level of security to respond to 
the new threats were primarily motivated by financial concerns. Federal 
funding earmarked for specific security-related expenses would ensure 
that Amtrak is able to provide whatever safeguards are appropriate and 
necessary to sustain the safety and security of its operations.
    Security-Related Capital Needs. Amtrak has also requested 
approximately $454 million in funds for capital projects intended to 
increase systemwide safety and security. The following charts identify 
the equipment and infrastructure investments Amtrak believes are 
appropriate to provide sustained heightened security in the wake of the 
September 11 attacks. 



    In recent years Amtrak's investment strategy has been driven 
substantially by its need to improve its financial condition. As a 
result, important projects, including ones that improve operational 
reliability or enhance security of equipment or infrastructure have 
lost out in the past in favor of investments that can provide a quick 
and significant return on investment.
    This is a strong argument for earmarking of the funds provided 
through this or other legislation designed to fund Amtrak's safety and 
security-related needs. The events of the past few weeks have clearly 
underscored how important these projects are, despite the fact that 
their results may not be immediately visible. Earmarking these funds 
serves two important purposes: one, it would ensure that the funds are 
not diverted to other spending needs, and two, it would provide the 
Department with necessary oversight and audit responsibilities.
Reauthorization and Funding for Long-Term Growth Needs
    The Amtrak Reform and Accountability Act of 1997 (ARAA) authorized 
nearly $5.2 billion in funding for Amtrak between fiscal years 1998 and 
2002. There is no provision in the ARAA for funds beyond 2002. There 
are several provisions in S. 1530 that extend Amtrak's funding, provide 
for Amtrak's growth needs and provide long-term funding for new 
corridor development. In our view, the debate on the future of 
passenger rail service and Amtrak's respective role should be conducted 
first before decisions are made about which needs should be funded, at 
what level, and through what mechanism.

1-year Extension of Authorization
    S. 1530 would extend Amtrak's authorization by one year, providing 
$1.2 billion in funds for Amtrak in 2003. A national discussion is 
needed about the future of Amtrak, the future of intercity passenger 
rail, and the extent to which these two should be intertwined. This 
discussion may start in the halls of Congress, but will need to include 
participation by states, cities, private industry, and the traveling 
public.
    We understand that the reauthorization provision would allow the 
Congress more time to fully address the range of issues necessary to 
decide the future of Amtrak and intercity passenger rail. But we 
believe there is an alternative. Repealing the Amtrak Reform Council's 
``sunset trigger'' provision or extending the windows in which the 
resulting restructuring and liquidation plans must be addressed would 
provide an adequate window to fully evaluate options for the future of 
passenger rail service.

Repeal of the ``Sunset Trigger''
    The ARAA requires Amtrak to meet operating self-sufficiency by the 
5th anniversary after passage of the law (December 2, 2002). After this 
date, no Federal funds could be used for operating needs, except those 
explicitly exempted in the law. The ARAA created the Amtrak Reform 
Council (ARC), which was tasked with monitoring Amtrak's progress 
towards its self-sufficiency mandate. Section 204 of the ARAA 
establishes requirements for the ARC to notify Congress and the 
President at such point that it finds that Amtrak will not meet its 
self-sufficiency mandate as defined by the Act. This finding, known as 
the ``sunset trigger'' sets into motion several processes, including a 
90-day window in which Amtrak must develop and present to Congress a 
liquidation plan and the ARC must develop and present to Congress a 
restructuring plan. Section 205 of the ARAA defines the Senate 
procedure for consideration of these plans. S. 1530 proposes repeal of 
Sections 204 and 205 of the ARAA.
    Amtrak's focus right now, and appropriately so, is on improving the 
security and safety of its operations, while adjusting to the new 
demand that it is facing in the wake of airline service reductions. If 
the ARC makes a finding under Section 204 of the ARAA and exercises the 
sunset trigger provision, Amtrak will be forced to redirect its 
energies towards developing a plan to liquidate its assets and cease 
operations.
    Eliminating the sunset trigger would allow Amtrak to keep its focus 
on improvement rather than dissolution. It would also allow the 
Congress to consider Amtrak's future and the future of intercity 
passenger rail on its own timetable, not one driven by the 90 day clock 
that starts ticking as soon as the ARC pulls the sunset trigger. If the 
provision is not eliminated, extending the windows for developing and 
evaluating the plans should be considered. Our concern is that the 
sunset trigger provision, as is, could force decisions to be made at a 
time and within a timeframe that are not appropriate to fully address 
the range of issues that need and require careful consideration.

Capacity-Related Costs and Improvements
    As part of the $3.2 billion estimate of post-September 11 funding, 
Amtrak has also requested $1.7 billion in funds for projects to make 
infrastructure improvements, and to overhaul and purchase new equipment 
to increase capacity to meet projected demand growth. These projects 
consist of the following: 



    All of the equipment and infrastructure projects included in the 
estimate are included in Amtrak's 20-year capital plan and are based on 
growth that Amtrak anticipated would occur during that period. This 
planning was completed prior to September 11 and the projected growth 
and planned capacity improvements to accommodate this growth are 
exclusive of any additional demands anticipated to occur as a result of 
September 11. At this point, it is not apparent how the events of 
September 11 will accelerate demand for additional capacity, nor to 
what extent the planned capacity improvements will need to be 
augmented.
    Our congressionally mandated annual assessment of Amtrak's 
financial needs will be issued within the next few weeks and will 
include preliminary results of our analysis of projected growth in 
passenger demand. We have updated our forecasts to reflect changes in 
travel characteristics resulting from the events on September 11. Our 
results will provide some indication of the extent, timing, and 
duration of demand changes. Until a complete analysis of the likely 
long-term effects of the terrorist acts on Amtrak's long-term passenger 
demand is completed, it is premature to provide funding for capacity-
related projects.

Funding Beyond 2003
    Several funding proposals have been introduced in the House and 
Senate including a variety of bond and loan guarantee mechanisms that 
would provide long-term funds for high-speed rail and corridor 
development. While some of the proposals specifically designate Amtrak 
as the bond issuers, others leave the option open for States, private 
companies, or coalitions to apply for and administer funds. If one of 
these measures were to be enacted, it could preempt the decision-making 
process that needs to occur during the reauthorization debates.
    Congress and the other stakeholders in passenger rail must decide 
on the future of intercity passenger rail and Amtrak's role in 
providing such. Until those decisions are more concrete, it is 
premature to make long-term funding decisions that presuppose the 
outcome of that debate.
    Mr. Chairman, this concludes our statement. I would be pleased to 
answer any questions.

    The Chairman. Very good. From your statement, Mr. Dayton, 
Amtrak not only needs to be reauthorized, but it needs a more 
in-depth review, by us here in the Congress, and particularly 
by this Committee. Is that right, as a broad outlook and 
vision, for passenger rail service in the country has not been 
decided upon. Is that right?
    Mr. Dayton. That is correct, and I think that process will 
need to involve a lot of different stakeholders, cities, 
states, the Amtrak Reform Council, Amtrak itself, the 
Administration, other Members of the Congress, and so that 
consideration needs to be given sufficient time to occur, and 
that is one reason why we would believe that the sunset trigger 
mechanism, while serving some purpose in perhaps earlier years, 
1998 and 1999, now rightfully should be put in abeyance until 
we have had time to do the debate, rather than rushing a 90-day 
consideration.
    The Chairman. Public passenger rail service is much like, I 
guess, world peace. We do not give up on it. We continue to 
work on it. But do you like that self-sufficiency provision? Do 
you think it is attainable? Do you know of any public passenger 
rail service in the world that is self-sufficient?
    Mr. Dayton. Well, I guess I would agree with Senator 
Carper. I think that it provided a good discipline for Amtrak. 
It is a key issue, however, about the amount of capital 
available to do that. Clearly, more capital would improve the 
quality of a lot of its capital, reducing maintenance costs, 
which are operating costs, and so it is not a simple answer, 
but we felt in the IG's office that this gave the Amtrak 
management and employees the proper incentive to try to 
minimize expenses while trying to increase revenue.
    The Chairman. Have they responded to that discipline, as 
you see it?
    Mr. Dayton. From our examination, yes, I would say they 
have. Every time we have met with Mr. Warrington and his senior 
staff we have found a very solid commitment to trying to reduce 
expenses. It is not to say we have not been dismayed that, as 
revenue has grown, that expenses have matched, unfortunately 
seem to have matched it for various reasons, but I will say 
this, that we have been impressed by the revenue growth over 
the last 5 years. Amtrak has had some solid revenue growth, and 
it is the expenses we need to get under control, and therefore 
we like the discipline that the mandate imposed on the 
corporation.
    The Chairman. Well, do either of the witnesses see anything 
really wrong with S. 1530? We are subject to amendment, and if 
you were king for a day would you go along with this bill, or 
would you amend it, throw it out? What serious misgivings, if 
any, do you have, Mr. Rutter, of S. 1530?
    Mr. Rutter. Well, first of all I would point out, not that 
I know how much good this is going to do me, is that the 
Administration has not taken a formal position on S. 1530.
    The Chairman. I am asking about your position.
    Mr. Rutter. Well, having worked for President Bush for 6 
years while he was Governor, the loyalty is a primary matter, 
and I would like to stay here for a couple more years.
    [Laughter.]
    Mr. Rutter. Part of the response is, the written testimony 
addresses some of the issues there. There is much to be talked 
about in addressing capital needs of shortline railroads. Those 
shortline providers provide valuable customer focused service. 
Frankly, it would be nice if Mr. Hamberger's members could 
provide the same kind of attentiveness to their customers that 
Mr. Turner's guys do, but whether the provisions in the bill to 
expand RRIF funding for those purposes is the best way of 
accomplishing that, I really cannot say at this moment.
    I would point out that, given the OMB's continued interest 
in the RRIF program itself, that they would like to provide 
some ongoing technical drafting assistance should the bill be 
advanced on the mechanics of the RRIF program, and should it be 
valuable to your staff, we would be happy to talk about that.
    The Chairman. Mr. Dayton, do you have any suggestions as to 
changes?
    Mr. Dayton. Well, most of our work has focused on Amtrak. 
We have not done a lot with the RRIF program and some of the 
freight issues at this point, and so that is why our testimony 
concentrated on that area.
    Again, I would summarize our position at this point is that 
we agreed with the security provisions, and particularly the 
life-safety in the New York tunnels. We have testified about 
that issue over 10 times, I believe, and we are glad to see 
that funding finally moving towards authorization, but 
otherwise I think our view is that the remaining provisions, 
while many of them meritorious in the bill, we think that is in 
a sense the starting point, the kick-off for consideration 
during reauthorization.
    The Chairman. Senator McCain.
    Senator McCain. Mr. Dayton, I was interested in your 
comment that when you meet with the Amtrak people you are 
impressed with their commitment to reduce expenses. Have they 
been reduced?
    Mr. Dayton. It seems that we take one step forward and one 
step back.
    Senator McCain. Well, is it not true there has been a 
steady increase in their expenses, and now a wider gap between 
expenses and revenues, all those facts are true?
    Mr. Dayton. Up until this year, the cash loss, which is 
what we focus on because depreciation has been growing--so that 
is distorting a little bit the operating loss--is that in fact 
the revenues and expenses have been in absolute terms 
practically moving in lockstep. For every additional dollar 
earned there is an additional expense dollar, so that the cash 
losses have remained essentially flat for the last 4 years. We 
have not made progress, that is correct.
    Senator McCain. Despite repeated testimony before this 
Committee that they would be reduced.
    Mr. Rutter, what is the Administration's position with 
respect to S. 1550, the Rail Security Act, which was reported 
by our Committee 2 weeks ago?
    Mr. Rutter. It is my understanding that save about $254 
million that was included in there for, I think, Penn Station 
access issues, the Administration supports the funding that was 
included in that bill for Amtrak security, for the life-safety 
issues on the tunnels, and for the Department's oversight of 
those expenditures, and for a fundamental or across-the-board 
assessment of rail security issues, both freight and passenger.
    Senator McCain. So with some change, you would support that 
legislation?
    Mr. Rutter. Yes.
    Senator McCain. Mr. Dayton, in your testimony you state 
that you recommend removing the sunset trigger requirement, in 
which the Reform Council is authorized to make a finding that 
Amtrak is not going to achieve operational self-sufficiency. 
You have testified before the Committee on many occasions, and 
never before have you mentioned the need to remove that 
trigger. What has changed your opinion, or given that a 
different priority?
    Mr. Dayton. I guess in the past the mandate was the policy 
goal. The trigger could be viewed as somewhat the incentive for 
the enforcement mechanism to require that Amtrak try to move 
forward and achieve it. As we have looked at each year an 
assessment of Amtrak's business plans, we have tried to look 
forward to the period of self-sufficiency to see if, in fact, 
these plans would achieve that goal.
    Each year, as we looked at that, I would suppose that, as 
early as 1998 or 1999, the factors were such, or so strong that 
it looked impossible for Amtrak to achieve the goal. We said it 
looks like it is not possible, and then at that time, if the 
Amtrak Reform Council so chose, it could impose the trigger 
requirement, and I guess our view was that the trigger 
essentially was a forced reauthorization.
    We had set up this goal over a 5-year period. If we looked 
forward and said, despite all the money we intend to give them 
over this period, they are not going to make it, then why go 
through that exercise? The trigger would essentially stop that, 
and force restructuring or liquidation, and essentially bring 
the reauthorization process into play as early as 1999 or 2000.
    Since we are now in fiscal year 2002, the year in which 
reauthorization must occur, we now think that that 90-day 
period that the trigger would impose may foreclose some options 
or some ability to reach out to all the stakeholders on 
reauthorization, so it is not so much that we changed our 
position. It is that we just think that given now that we have 
reached 2002, it would be better to ensure that we have plenty 
of time for consideration of the issues, rather than some 
artificial deadline of 90 days followed by 90 days of 
congressional consideration.
    Senator McCain. Well, that was not the intent when I voted 
for the bill, to wait until a certain period of time and then 
just have it go away. It was an important part of the 
legislation, and unless you mean it, then you should not be 
writing legislation that imposes certain penalties for 
nonperformance.
    What is Amtrak's debt load, Mr. Dayton?
    Mr. Dayton. I think it was mentioned earlier. It is over $3 
billion.
    Senator McCain. And what do they pay to service that debt 
load.
    Mr. Dayton. I believe in the coming fiscal year it is going 
to be close to $200 million.
    Senator McCain. Has your office been tracking Amtrak's 
ridership?
    Mr. Dayton. We do as part of our assessment, yes.
    Senator McCain. And has it been up since September 11?
    Mr. Dayton. For September it is actually down. For fiscal 
year 2001 it is up over 2000, but for the month of September it 
was down this year.
    Senator McCain. Is it not true that it was down 16 percent, 
worse than Amtrak's projections for the month?
    Mr. Dayton. I do not have that number right here with me.
    Senator McCain. I think that is true.
    I thank you, Mr. Chairman.
    The Chairman. Thank you. Senator Nelson.
    Senator Nelson. I would yield to Senator Cleland.
    The Chairman. Go ahead, Bill.
    Senator Nelson. Well, Mr. Chairman, I would pose a 
rhetorical question to you and Senator McCain. As Senator Biden 
says, a lot of this is religion, and people are hardening their 
positions, and as a new Senator here trying to evaluate this, 
it seems to me that there are clearly parts of the country 
where Amtrak serves the public interest, particularly the high 
density corridors, and the future of high-speed rail in those 
high-density urban corridors, where you just cannot build 
yourself out of the problem with roads because they are just 
too congested, and you cannot do it just with airplanes.
    And so we ought to be pouring the juice, that kind of 
stuff, to encourage rail transportation as an alternative, and 
yet there are other parts of the country where it does not look 
like they are ever going to make money because people simply 
are not going to ride the rails if there are alternate means, 
either through a car, or in the case of airplanes, so I am 
wondering, how do you bring this debate so it is not an either-
or, all-or-nothing kind of thing, and I just pose the question, 
if you all want to comment on that, or perhaps steer it to one 
of the witnesses I propose the question.
    Senator McCain. I would like to respond very briefly, 
because I have been on this Committee now since 1987, and what 
we do is, we go through this cycle. We bail out Amtrak, and we 
give it billions of dollars or more, and we say, now everything 
is going to be fine, and then a few years later Amtrak comes 
back, and comes back, and comes back. We go through this same 
cycle. In 1997, do not worry, this is the last time, it will be 
independent.
    I did not say that. I never believed it, and I said, you 
will not, but everybody passed the bill, the legislation which 
bailed Amtrak out again for several billion dollars, and they 
are back again, and they will get their bailout for $7 billion, 
they will get it again, and then 3 or 4 years from now you will 
be sitting there, maybe a little closer to the chairman, and 
they will be back again for more billions of dollars, you see.
    There has been no straightforward depiction of the problems 
of Amtrak, and I agree with you, I think it can be viable in 
the Northeast. I think it can be viable in the Far West. 
Amtrak, and perhaps some day someone will get a straight answer 
from them, they set up a line, a passenger route in the State 
of Wisconsin which we subsidized for $512 per passenger. No one 
in their right mind believed that that route would ever, ever 
make a dime, but somehow the State of Wisconsin, they put in 
this route.
    I have got a list here. We are subsidizing lines: 
California Zephyr--let's see, $103 per passenger for fiscal 
year 2000; Southwest Chief, $131 per passenger; Lake County 
Limited, over $500; I guess that is the Wisconsin one, which I 
think they have just done away with; The Texas Eagle, $189 per 
passenger; Sunset Limited, $271 per passenger. I mean; it is 
crazy. It is crazy. People do not ride them there.
    I do agree that the Northeast is viable. I believe the Far 
West is viable, maybe around Chicago, that there could be a 
viable system, but to think that you have to buy off the votes 
of Senators by promising them an Amtrak route in their State 
does not make any sense. I join with Senator Gramm in telling 
the Amtrak people you do not have to put a route through my 
State, but what you have to do is come up with a viable plan 
that is realistic, and if that plan means that we have to 
continue to subsidize Amtrak, I can consider a reasonable 
proposal.
    But what they have done since 1973 is promise self-
sufficiency in 2 or 3 or 4 years, and it has never happened, 
and we bail them out every time. That is why it has got to be 
restructured and reorganized, and a little bit of truthful 
testimony before the Congress of the United States.
    The Chairman. Senator Smith.
    Senator Smith. Thank you, Mr. Chairman. I think what 
Senator McCain just said is very profound. I just want to know 
what the truth is. Are we going to have a national system, or 
are we going to have clusters of regional systems? I am 
prepared to support a regional system, but I do want to be part 
of the discussion, that maybe there is a place in the far West 
where my State could be included. We have eliminated lines in 
my State where they just will never make money, and I recognize 
they will never comeback, but I am open for some ``straight 
talk. express'', if I may put it in that way, and I think we 
just had some, but I hope Amtrak will give us the truth.
    Mr. Rutter, is there anything in the bill that is before 
you that you know of that would cause the President of the 
United States to veto it?
    Mr. Rutter. S. 1530?
    Senator Smith. Yes.
    Mr. Rutter. I probably could not say that. I can say the 
Administration does not have a position on it. That does not 
necessarily equate to there is something in the bill that would 
make him not sign it. He has the pen and I do not.
    Senator Smith. There may be, though?
    Mr. Rutter. Here again, it is a matter of not so much being 
against something that is in there. It is just that I cannot 
say what we are for yet.
    Senator Smith. Senator Breaux and I have now included in 
this larger bill, S. 1220, the Railroad Track Modernization 
Act, that is specifically focusing on regional and shortline 
railroads. Does the Administration have a position on that 
proposal?
    Mr. Rutter. That would be the capital grant program for 
short lines?
    Senator Smith. Yes.
    Mr. Rutter. No, sir.
    Senator Smith. Mr. Dayton, you testified in earlier 
hearings before this Committee that these tunnels in New York, 
that they are used by, obviously, Amtrak, the Long Island 
Railroad, New Jersey Transit, and you have stated that they 
should all share in it, but I think I have heard you say that 
the Administration has changed its position now, and that the 
American taxpayer should bear all of the burden of those 
tunnels? I mean, your specific words were, it is our view that 
providing full earmark for these projects is the best option.
    Mr. Dayton. Well, I guess from the Inspector General's 
standpoint, we do not speak for the Administration, but that 
these tunnel issues, we think both the commuter carriers and 
Amtrak have done an admirable job of prevention. They have 
tried to prevent equipment going into those tunnels that would 
lead to an emergency, but the funding has never been there to 
fully solve the problem.
    Senator Smith. And never will be. Are you not just 
recognizing that this is never going to get done?
    Mr. Dayton. Well, under some of our estimates, if the 
funding continues at the level it had been going, it would not 
get done until 2030. That is obviously too long. We were just 
gratified to see this full authorization. I suspect that the 
States would be willing through negotiations to put in some of 
the capital funding share. Either way, depending upon how they 
received the money, it could come through transit discretionary 
grants, so in some ways it would be federal money funneling 
through the FTA, or in a direct approach that is in the bill, 
and I guess our concern is just to see the projects move 
forward, given the risks now that merely preventing, or having 
good equipment moving through the tunnels may no longer be 
enough.
    Senator Smith. I understand the motive, and I think it is a 
commendable one, but we are going to have this amendment, or in 
this bill, if it is not already there, an amendment to give you 
the opportunity to negotiate with these other lines some 
portion, some fair allocation that they can contribute to it, 
because I think it would be wrong to have the American taxpayer 
just pick it all up, but clearly the lion's share will be 
picked up by the American taxpayer. We need to do it sooner, 
not later.
    Mr. Dayton. We think that is reasonable. We would like to 
see, though, to make sure that it gets done.
    Senator Smith. That is critical. Thank you, Mr. Chairman.
    The Chairman. Senator Fitzgerald.
    Senator Fitzgerald. I just looked at that list that Senator 
McCain had about the profit or loss per passenger, the amount 
of subsidy per passenger per route in this country, and it 
looked like they lost a lot of money on almost every train 
passenger who boarded. There were only a few profitable routes 
in the whole Amtrak system. Do you, Mr. Dayton, feel that it 
might be wise to terminate some of the most unprofitable 
routes, the ones losing $500 per passenger? Or those requiring 
a subsidy of $500 per passenger, and trying to focus Amtrak on 
its most profitable routes?
    Mr. Dayton. In the work we have done to date we have tended 
to focus strictly on Amtrak's financial position and its 
projected position. We have not said, let us step back, and how 
would we reorganize the system, given these projections. We 
intend to do some of that work now in the coming year, so with 
our next report we would probably have some recommendations on 
reorganization.
    Speaking to what Senator McCain was saying, our position 
really has not changed. I guess what our view is, we want to 
stop that cycle as well, that we think, and I think Mr. 
Warrington has adopted this position as well. He can speak for 
himself, but we cannot keep going through that cycle, and it 
really is time in this reauthorization to determine whether we 
are going to keep these trains and subsidize them. This is a 
broad social policy that needs to be addressed, or whether we 
focus the system on corridors around the country, or some other 
alternative. We think that is all part of the debate that has 
to occur in this reauthorization. We should stop the cycle, and 
I think Mr. Warrington is in favor of that.
    Senator Fitzgerald. And you will make recommendations later 
as to what we might want to do, tied to any new reauthorization 
of Amtrak?
    Mr. Dayton. We will bring our expertise to bear, to the 
extent we can. There may be some things better answered by 
Amtrak, or the Reform Council, or the states themselves, but we 
will try to provide as much help to the Congress as we can.
    Senator Fitzgerald. Do you agree with the statement that 
Senator Gramm made, that it is unrealistic to believe that we 
can have a successful national rail system?
    Mr. Dayton. I think, given the long distance trains, it is 
going to be difficult to have them there without some kind of a 
subsidy, whether it is a cross-subsidy from some corridors that 
are developed. You could imagine in 10 or 15 years, if many 
corridors were very successful, they would be throwing off 
enough money to cover operating losses elsewhere, but today, 
Amtrak is having trouble making that equation work, and so I 
think we need to have some different answer moving forward in 
the short term.
    Senator Fitzgerald. Well, Mr. Chairman, I just want to say 
that I agree with a lot of the conflicting sides. I agree with 
Senator McCain and Senator Gramm, who think that we need to put 
a tight rein on Amtrak, but on the other hand, I would point 
out, as one of the witnesses or one of the Senators testifying 
earlier said, we gave the airlines more money in the last few 
weeks than Amtrak has probably received in the last 30 years.
    We gave the airlines $15 billion. They lost $340 million a 
day for 4 days. That is $1.36 billion in losses, and we gave 
them $15 billion, and now the airline executives are over in 
the House, they are going to remove that prohibition that they 
use that $15 billion to raise their own salary. That is part of 
the House bill, and so it probably is unfair that we beat up 
only on Amtrak around here. I will say that, especially after 
the example of the airlines.
    With that, Mr. Chairman, thank you.
    The Chairman. Thank you. Senator Cleland.
    Senator Cleland. Thank you very much, Mr. Chairman. As an 
original cosponsor, not just this year but last year, of this 
effort to boost Amtrak and allow it to attract the market that 
we know is out there, and to break out of the Northeast, and to 
go West, and come to the Southeast, and boost our 
infrastructure, create jobs, put people to work, boost tourism, 
trade, travel in this country, I am glad we are having this 
hearing.
    It is interesting that while we are talking about subsidies 
and infrastructure and economic stimulus and economic recovery, 
I just read an article in the Wall Street Journal about what 
President Eisenhower did in the mid-fifties, in the wake of the 
recessions of that era. He proposed a national defense 
interstate highway system, which was part of our defense 
structure to move people around, to move forces around in case 
of a nuclear attack. They also have the tremendous benefit of 
dramatically increasing our economic growth, allowing 
transportation and mobility in this country unheard of and 
undreamed of, and this author was talking about, why don't we 
do a similar thing here.
    With the economic downturn, with the hit that we have taken 
on the airlines, it does seem to me this is a perfect time to 
go ahead and invest in a national defense interstate, intercity 
rail system.
    I would offer just one observation in my own life. 
September 11, when the attack broke out, and within 2 hours 
every airplane in America was grounded, I normally go back to 
my state every weekend, and so what did I do? I called Amtrak, 
I got on an Amtrak train right down here at Union Station, and 
overnighted back to my home. That train was full. It was packed 
with passengers coming out of Boston, coming out of New York, 
coming out of Washington, headed south.
    I think that it was fascinating that we did have a plan B. 
We did have an alternative to move around in this country. If 
we did not have Amtrak I think it would be devastating to this 
country, and we would be very vulnerable in many ways to the 
travel that we have left. I mean, since the attack, or the hit 
of the focus on the airlines using missiles and bombs, we have 
had a bus driver from Nashville to Atlanta who had his throat 
cut. The bus was hijacked. We have had these kinds of things, 
so we have got to increase our security for our modes of 
transportation, but I think it would be foolhardy not to invest 
now, dramatically invest in Amtrak.
    I will say, Mr. Dayton, that I am told that before 
September 11 Amtrak handled about 1.5 percent of all the travel 
in the United States, and that it was the seventh largest 
carrier of passengers behind our major airlines, including 
United, American, and Delta. As a result of the events of 
September 11, I am told Amtrak's ridership now exceeds 
dramatically this estimate.
    Now, what effect do you think it would have on our country 
just removing Amtrak from the current equation and doing 
without this mode of transportation? What effect would that 
have on our country?
    Mr. Dayton. For the long distance routes, I think it is, as 
you said earlier, that Amtrak serves as an alternative means of 
transportation for the Northeast Corridor, and perhaps somewhat 
in California, with the Pacific Northwest. I think the impact 
would be much greater, that Amtrak roughly carries 40 percent 
of the traffic between Washington and New York, and La Guardia 
was already in dire straits in terms of capacity issues.
    So without Amtrak in the Northeast Corridor it would have 
quite an impact on the aviation system, and perhaps could 
offer, again, I think part of the debate is whether it could 
offer that same sort of alternative in other corridors around 
the country we certainly need to study the demand forecasts, 
and how much it would cost, but it may provide the same sort of 
integral alternative in other corridors around the country, and 
then for the long distance trains, I think again the problem 
there is the cost of running that kind of operation, but it 
does serve as an alternative.
    Senator Cleland. I am told that some 32 states, including 
my state, these states are currently investing in rail 
programs. Why? Because, as the State of Texas has found out, a 
study by the Texas Transportation Institute on traffic 
congestion concludes the solution does not lie in building more 
roads but rather in, ``a diverse set of options that require 
funding commitments.'' Do you believe that the Rail-21 bill is 
one of those funding commitments that is needed?
    Mr. Dayton. We have not looked at the longer term 
provisions that would involve the freight railroads in part. We 
just have not done a lot of work in that area. We have tended 
to focus more on Amtrak. But it is true that many states see 
the rail corridors coming into their cities as an opportunity. 
It would not only carry higher speed Amtrak, or another 
intercity provider, but also commuter service into the cities, 
so it can help with the congestion of a through rail corridor. 
But in terms of how you achieve that, what mechanism you use, 
working with the freight railroads such as the RRIF program, we 
have not studied it directly.
    Senator Cleland. Well, you talk about cities. One of the 
impacts that revitalizing rail travel in America does is 
revitalize our cities, particularly our inner cities. In my 
state the Atlanta Multimodal Passenger Terminal that we are 
building there plans to sell actually air rights for private 
space above the new proposed rail-bus station, a perfect blend 
of public investment, private partnership, above the rail-bus 
multimodal terminal. Any idea how we can better attract the 
private sector to participate, and maybe further rail 
development?
    Mr. Dayton. I am sure Mr. Warrington can speak to that. He 
and his board members have been involved in discussions all 
around the country with mayors and Governors, but it is 
certainly true that Amtrak has invested in its rail stations. 
You can see this not only on the Northeast Corridor, places 
like Wilmington and New Haven, but also elsewhere in the 
country, as you say, with the multimodal facility, and it 
certainly can serve as a focus for both transportation and 
economic development.
    Senator Cleland. Thank you very much. Thank you, Mr. 
Chairman.
    The Chairman. The Committee is indebted to both of you. We 
appreciate your appearance here, and the record will stay open 
for any further questions.
    We now move to panel number 3, Mr. George Warrington, 
president and CEO of the National Railroad Passenger 
Corporation, Mr. Edward Hamberger, president and CEO of the 
Association of American Railroads, Mr. Frank Turner, president 
and CEO of American Shortline and Regional Railroad 
Association, and Mr. Edward Wytkind, executive director of the 
Transportation Trades Department.
    Mr. Warrington and each of the witnesses, we welcome you to 
the Committee. We appreciate your patience, and as you can see, 
with the limited time, let us file your full statements in the 
record and ask you to summarize it as you can.

  STATEMENT OF GEORGE D. WARRINGTON, PRESIDENT AND CEO, AMTRAK

    Mr. Warrington. Thank you, Mr. Chairman. I would like to 
make a couple of comments.
    It is very clear to me that there is a lot of intensity and 
passion around this subject, as there has been for 30 years, 
and we have worked very, very hard to try to make this business 
model work over the last number of years, and we have worked 
very, very hard to achieve that definition of self-sufficiency.
    But I will also tell you that its ultimate success from the 
beginning has required every moon to align perfectly, and there 
are clearly forces, economic forces and other forces that are 
not always within our control, and we really do not have the 
margin here for error, and I think that this debate here today 
is absolutely critical. I know Senator McCain has called for 
this discussion and this debate for quite sometime here, and I 
really thank you, Mr. Chairman, for the opportunity to begin 
this debate.
    I was very encouraged here this morning, listening to it, 
because this town, frankly, and all of us have sidestepped 
dealing with this fundamental issue for 30 years. I firmly 
believe that. We have worked very hard to work within the 
construct that was handed to us, and I respect that construct 
tremendously, but it is a very difficult construct to work 
within, because fundamentally we have a conflicting mission 
here, which I have spoken about over the last 6 or 8 months, 
and what we need is, frankly, the debate to end fairly quickly, 
and closure to be brought to the question about what this 
country expects Amtrak and intercity rail service to be, 
because we are challenged with trying to satisfy a classic 
commercial profit mission around self-sufficiency, and at the 
same time we are challenged to operate a national system, and I 
will tell you that that national system is in many places and 
in many ways a public service that we operate, not unlike 
essential air service to many underserved markets and 
communities across this country.
    On the heels of September 11, and in the context of a 
clearly declining economy, the challenge is greater and greater 
for us, and I think the time is perfect, the time is right, to 
take up the concept of reauthorization, and through that 
discussion and debate, really define for the first time, help 
us define what our mission should be. Should it be around 
profitable commercial service? Should it be around a long 
distance train network that serves underserved communities, 
connects communities, provides for economic development, 
provides alternatives and choices for travelers in a congested 
aviation and highway mix of transportation services?
    I welcome the debate. I will tell you that we have worked 
very hard, and towards the end of this year we will be able to 
better inform that debate about articulating very clearly and 
very honestly, much of this is about honesty, and much of this 
is about credibility, and I will tell you, I am very interested 
in being honest, and I am very interested in assuring that we 
are credible with respect to what the different pieces of this 
business are.
    We need to be transparent about what the winners are and 
what the losers are, and what the costs are, both the operating 
costs and the capital costs of every part of this system that 
we run today, and what their potential is or is not as a 
commercial entity, and what their obligation might be as a 
public service or an essential service connecting communities 
around the Nation.
    I will tell you that the concept of profits, and the 
concept of self-sufficiency, flies in the face of every 
developed and underdeveloped nation in the world. The only 
nation in this world where high-speed service, and it is only 
high-speed service, not conventional service, where high-speed 
service is actually profitable is the main service, high-speed 
service in Japan, and it is purely a function of the Japanese 
Government investing $6 billion a year in that individual 
corridor, number 1, and a population density per square mile of 
about 6,500 people.
    Even in our most densely populated region in this country, 
the greater New York Metropolitan Region, we have got a 
population density of about 2,500 people per square mile.
    So you have got a very unique situation in Japan, capital 
investment and extraordinary density of population that makes 
that service profitable. As a matter of fact, on the flip side 
of that, if you look at nations that are constructed much like 
the United States is, big, wide, expansive territories served 
by long distance train services, Amtrak actually performs 
financially better than those operations.
    I would point you toward Australia, and I would point you 
to the Via Rail system in Canada, where you have got the same 
characteristics in play, a service that stretches across the 
nation, serving underserved markets with not extraordinary 
population density, and I will tell you, the business model and 
the economics services like that around the world, including in 
this country, are not ever going to be profitable, and will 
lose money, the list that Senator McCain shared with you 
earlier today.
    It is true, I am not going to sit here and tell you that 
those trains have a potential to be profitable and to make 
money. We are running them as a public service, as a practical 
matter, number 1, to serve communities, and number 2, we are 
paying for them, as best as possible, by cross-subsidizing 
internally from our more successful operations.
    What I am telling you also is that there are factors out of 
our control that is making even that task of cross-subsidizing 
internally that much more difficult, and on top of that we have 
never been effectively capitalized, as they have been in Japan, 
and as they have been in Europe, in order to give us a fighting 
chance to make even those unsuccessful services more 
successful.
    Thank you very much for the opportunity.
    The Chairman. You can continue on. You have got your 
fighting chance. If you have got some more to say, let's say 
it, because I think you are making sense.
    [Laughter.]
    Mr. Warrington. Mr. Chairman, there are a lot of frustrated 
people about this question, very clearly, and I feel the 
intensity and the passion around this room, and I do not want 
to be either emotional, and I do not want to passionate.
    This is about public policy, and I really believe we have 
all side-stepped the basic public policy question for a long, 
long time, and it is one that right now, in particular, as we 
look forward around congestion, aviation congestion, highway 
congestion, the events of September 11, the need for better 
choices and alternatives, opportunities to better stimulate 
economic development, investing in the rail system. I often say 
it is the most underutilized transportation asset this country 
has right now, and Ed can speak to that as well.
    But the rail system, whether it is the freight rail system, 
the passenger rail system, or a better freight and passenger 
rail system, I firmly believe is the most underutilized 
transportation asset that this country has right now, and we 
need a business model that works around intercity passenger 
service, because the current model really does not work. It is 
an artificial construct, and I think there is extraordinary 
opportunity there.
    I will tell you also that, I have said this before, and I 
will say it today, the concept of operating self-sufficiency, I 
think it was not, let me put it this way; Its construction is 
difficult to work within, given the multiple businesses we are 
in, so we have had to cross-subsidize internally.
    I will be the first to tell you, though, that we do need a 
good metric, and a good measure, and a good standard against 
which we measure ourselves around success. The question is, 
what is success, and in fact the Senator earlier said, well, do 
any of these routes have a potential for success. It is all a 
matter of how we define success.
    Is success effectively serving a public service 
responsibility, serving communities, serving underserved 
markets across this country, stimulating economic development 
around the train stations, Senator Lott, such as Mayor John 
Robert Smith has done in Meridian, Mississippi, so successfully 
around our Crescent train service? There are lots of other 
measures in this world for intercity train service, other than 
the bottom line.
    The bottom line is not the appropriate measure. We need 
standards, we need metrics, we need to stick to them, but 
fundamentally, this is about what the public service 
responsibility is, and investment responsibility is in a 
quality and reliable intercity passenger rail system, and we 
have not come to grips with that question yet, and I really 
look forward to helping to inform that discussion about what is 
rational, what makes sense in this country around intercity 
rail service, and what we are doing is breaking the business 
down into its pieces so it is transparent, so we can all 
understand what those choices and opportunities are, what the 
potential is, and then we need to align capital and/or 
operating resources to fund it.
    So I welcome the discussion. The sooner the better, quite 
frankly, so we can get on with focusing on really making a 
difference.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Warrington follows:]

 Prepared Statement of George D. Warrington, President and CEO, Amtrak

    Mr. Chairman, thank you for the invitation to appear before the 
Committee this morning. On behalf of our Board and our 25,000 
employees, we thank you for your leadership on passenger rail issues. 
We are especially encouraged by this Committee's recent unanimous 
support of the Rail Security Act, S. 1550. This bill is critical to 
strengthening the security and safety of our national passenger rail 
system. We hope it can be enacted promptly.
    I also appreciate the opportunity to address S. 1530, the Railroad 
Advancement and Infrastructure Law for the 21st Century, or ``RAIL-
21.'' The need to resolve the issues raised by RAIL-21 has never been 
greater than it is today. Indeed, we welcome this measure--and similar 
ones emerging in the House and from the Administration--as the first 
steps toward a comprehensive reexamination of our nation's passenger 
rail policy over the next several months.
    As we go forward together, I believe we need to find common ground 
around two goals:

   The first goal must be to eliminate conflicting policy 
        mandates and clearly define the role of intercity passenger 
        rail in America's 21st Century transportation mix.

   The second goal is to be honest and straight about the 
        operating and capital costs that are necessary to support the 
        defined missions.

    Our conflicting policy mandates are at the root of our problems. 
For 30 years, Amtrak's primary mission has been to maintain and operate 
a national network of passenger rail service. Our charter statute 
directs Amtrak to ``completely develop the potential of modern rail 
transportation to meet the intercity and commuter needs of the United 
States.'' In 1997, Congress reaffirmed our national public service 
role, but it also added a requirement that we achieve operational self-
sufficiency by December 2002.
    Amtrak's Board, management, and employees have made serious, 
sustained efforts to achieve these objectives. For the past four years, 
we have been working hard to meet the self-sufficiency deadline and 
hold the national system together. But the practical effect is that we 
must cross-subsidize the unprofitable, public-service routes with 
revenues from profitable routes and other commercial activities. That 
leaves no money for reinvestment in the existing system, and it drives 
up operating costs because we are unable to modernize our plant, 
equipment, and technology.
    It was difficult enough to reconcile the conflicting mandates and 
inadequate capital before September 11 and the downturn in the economy. 
Today, trying to meet both public service and commercial requirements 
is more difficult than ever before. With the economy contracting and 
public expectations about security and safety rising, the self-
sufficiency deadline will force us to choose very soon between two 
evils:

   Meet the self-sufficiency requirement by taking on more 
        debt, mortgaging assets and cutting back service severely;

   Or preserve the current system and increase security in the 
        short run, risking a statutory process which, under the law as 
        written, could lead to liquidation and which would paralyze us 
        financially.

    Either course would make more difficult the high-level policy 
choices that only Congress and the Administration should make. That is 
why we strongly support an early reauthorization effort.
    Fortunately, the RAIL-21 bill shows a recognition that Congress and 
the Administration have workable options and a timely opportunity to 
resolve these dilemmas.
    It is an opportunity to decide what America's intercity passenger 
rail system should become in the next 20 or 30 years. You may decide it 
should consist of profitable routes only. Or that it should also 
include the federally designated high-speed corridors. Or expand that 
to include long-distance routes through many important communities, 
large and small. Amtrak stands ready to inform this discussion. But 
only policy makers can define our mission.
    Hand in hand with these choices, you must decide how the system is 
to be financed. Operating revenues cannot do the job alone. This means 
being specific and realistic about how much capital will be provided to 
support the various components and what the sources of funding will be. 
Should Amtrak cross-subsidize the public services that don't pay for 
themselves? Or should there be direct government support of these 
routes?
    As I said a moment ago, we are eager to help inform the discussion, 
but the decisions must come from policy makers. In that regard, RAIL-21 
is a solid basis for continuing the discussion, and we ask again for 
your assistance in bringing these issues to closure.
    Mr. Chairman, when you introduced RAIL-21, you said:
    ``Nations around the globe invest in passenger rail service because 
it increases opportunities to travel and a nation's quality of life. 
Rail service reduces car congestion and pollution. And we saw last 
month that during a national emergency, having a viable, operating 
national train system can be a strategic asset.''
    I think that hits the nail on the head. Passenger rail is not a 
solution to all our transportation problems, and we bring some 
challenges to the table. But we certainly face an extraordinary 
opportunity to guarantee greater freedom of movement--and other social 
and economic benefits--for a relatively modest price tag. Smart, 
strategic investments in rail will reduce traffic congestion, create 
jobs, and strengthen the foundations of our economy and mobility.
    For 30 years, Amtrak has labored under the weight of a business 
model that does not work. It's time to fix the model. We must seize the 
opportunity to clearly and honestly define the role of passenger rail, 
and provide the policies and financial commitments to ensure we do it 
right--the way all of our economic competitors do.
    Once again, Mr. Chairman, we appreciate your support and efforts to 
bring quick resolution to these critical national issues. We are ready 
to work with you and all Members of Congress to write a new chapter in 
the history of passenger rail in America.
    I would be happy to take your questions.

    Senator Smith. Mr. Chairman, I wonder if Mr. Warrington can 
tell us, is there a model out there that he thinks works for 
us? The high-speed train in Japan--I do not know how they do 
their accounting--but they cannot make money if they have to 
account for capital, interest, all of those things. Europe 
cross-capitalization--I want to know how they do that. If they 
are making money, I would like to know how they are, but 
clearly, the public is picking up all of the capital assets and 
they are just accounting for profit based upon ticket sales 
with no overhead.
    Mr. Warrington. You are right, Senator. They are a 
beneficiary of decades of $5 to $6 billion a year invested in 
that train service.
    Senator Smith. So what we need, Mr. Chairman, is an 
accounting definition. We need to agree here on how it is 
Amtrak is going to account to us, because clearly we have not 
arrived at that, or some model whereby they can ever meet it. 
We are all talking about different ends here, and there is no 
agreement on the terms.
    The Chairman. Well, many are trying to approach it from a 
profit and loss standpoint, and like I said in my opening 
comments, there is no such thing as a public passenger service 
that makes a profit in this world, and that is the impossible.
    I would yield to Senator Lott here, because his time is 
valuable.
    Senator Lott. Would you allow me to make a couple of 
comments first? I want to thank all the witnesses you have here 
today, and thank you Mr. Chairman, for having this hearing. I 
am particularly interested in the testimony of this panel. Mr. 
Warrington has already done a good job, and I know the other 
three will, and I have worked with them over the years and know 
and respect them, and I remember when old Ed Hamberger had a 
real job.
    [Laughter.]
    Senator Lott. He is out there in the private sector working 
for a really good organization, the Association of American 
Railroads.
    I would just like to make a couple of points beyond that. I 
think the record is clear, I have been a supporter of the 
national rail passenger system, I have worked on the Amtrak 
bill we passed a few years ago, and I want us to succeed. I 
think Amtrak is a valuable service, but I also think you need 
to be fiscally responsible.
    I think you have got to be able to use some innovative 
private sector ideas, and we tried to do that with that 
legislation we passed a few years ago. We wanted to be able to 
contract out privately and improve Amtrak's service. I wanted 
you to be able to wheel power, but of course I got in a 
hornet's nest on that one with some of the electric companies. 
I want us to have a successful national rail passenger system.
    I think in order to do that, though, we have got to give 
you the resources to be successful. That is where Senator 
McCain and I have been arguing back and forth for years.
    I think we are going to have to look at the accounting 
principles, but I think you have also got to continue to be 
responsible. This is not going to be any bottomless pit of 
taxpayers' dollars. My attitude has been--and I have made this 
statement on the floor of the Senate, and some day I may have 
to live up to it--if you cannot make ends meet after we give 
you certain assistance, then we have got to make a decision, 
keep it going or shut it down. If it becomes an Eastern 
Seaboard system, I am not going to be voting for my 
constituents to pay for that.
    So I wish you well. I have been supportive, and I am 
supportive of the high-speed rail infrastructure bond 
legislation we worked on last year. I am a cosponsor of the 
bill with Senator Daschle. I would like to get that out of the 
Finance Committee, but we want you to improve your ridership 
and reduce your costs.
    We would like to be sure that you are secure. We have got 
to look at Amtrak security, as well as other rail activities. 
The trains that go right through the middle of my home town and 
along the entire Mississippi Gulf Coast are carrying chemicals 
and all kinds of things, and I would like to make sure those 
trains are secure and safe. Also I want to thank the folks that 
are here, the Shortline and Regional Railroad Association and 
others that have endorsed the legislation that Senator Kerry 
and I have introduced, S. 948, the Community Rail Line 
Relocation Assistance Act.
    Mr. Chairman, I hope you will take a look at that very good 
piece of legislation. It is an effort to deal with a problem we 
have in America. In fact, 23 States now, and 40 cities, have 
situations where you have got the railroad line coming right 
through the heart of a city, which cuts it in two. It is a 
safety hazard, and it is an impediment to economic development, 
and it goes all the way from Freemont, California, to Columbia, 
South Carolina, to that blessed Biloxi-Pascagoula Mississippi 
area, and yet there is no way to deal with it.
    The railroads said yes, we would like to get out of this, 
because we would like to quit being sued for actions where 
people are killed at railroad crossings, but we cannot afford 
to do it all by ourselves. The local governments say yes, we 
would like to be a party to this, but we cannot do it 
ourselves. The States say, we would like to help but we cannot, 
even under TEA-21. We could do this and we would like to help, 
but we do not have enough money to do that and build the roads 
and build the bridges we need.
    The net result is that nobody does it. Therefore I think we 
need to authorize a program to bring all of those folks 
together, the States, counties, local governments, the 
railroad, and the private sector in general, to move these rail 
lines where they are cutting off towns and communities, and 
they are unsafe.
    I talked about this a few years ago in Biloxi, Mississippi. 
I was talking to a civic club, and a guy there named Desport 
came up after the event and said that it sounds like a good 
idea, we probably need to try to make that happen. The next 
day, his son was killed on a railroad crossing in Biloxi, 
Mississippi, and he called me the next week and said, let me 
tell you what happened.
    So I hope that the industry will actively support this 
bill. Mr. Chairman, I hope you will take a look at it. It is a 
part of the package we need to look at. Transportation is so 
critical to the economic future of this country, and I mean the 
whole package. I am talking about ships and ports, I am talking 
about railroads, airlines, and safe roads and bridges. It is an 
investment in the future that I think we should be prepared to 
make. I thank you for what you have already made and urge you 
to redouble your efforts and let us make Amtrak work for all of 
us.
    The Chairman. And help us clear the rail security measure, 
because at least we can get that, and should get that before 
Thanksgiving.
    Senator Lott. If I could unilaterally make that decision--
you know, that was 8 months ago.
    [Laughter.]
    Senator Lott. I will try to be helpful.
    The Chairman. What I will say is, it is cleared on this 
side. You get it cleared over there.
    Senator Lott. Okay, Mr. Chairman. We might work something 
out on this.
    The Chairman. I am glad to work with you, because we have 
got to improve seaport, rail and airline security, and right 
now those efforts are hung up.
    Senator Lott. We need it in South Carolina and Mississippi, 
and I think we could work something out.
    Thank you very much.
    The Chairman. Thank you. Mr. Hamberger.

     STATEMENT OF EDWARD R. HAMBERGER, PRESIDENT AND CEO, 
               ASSOCIATION OF AMERICAN RAILROADS

    Mr. Hamberger. Thank you, Mr. Chairman. Let me, just in 
case the Leader has to leave, indicate that the AAR certainly 
supports S. 948 as well. We think it has tremendous potential 
for affecting congestion and safety and local economic 
development, and we look forward to working with the Committee 
and with the Leader on that.
    If I could, Mr. Chairman, before I get into my prepared 
remarks I would like to respond to a statement the FRA 
Administrator made on the previous panel. Without in any way 
detracting from the well-deserved reputation of the shortline 
industry for their commitment to service, that is, indeed, the 
hallmark of the shortline industry, I believe, and while 
recognizing and acknowledging that there have been service 
disruption in previous years, I would like to read into the 
record a statement in the press yesterday from United Parcel 
Service spokesman Norman Black.
    ``All the railroads right now are running about as well as 
they ever have'', he said. They are meeting their delivery 
times, ``almost 100 percent'', and I would like to ask your 
permission, Mr. Chairman, to submit for the record other 
documentation regarding new service offerings that the class I 
freight railroads are making, both individually and on airline 
service, as well as statements from other customers, industry 
observers, Wall Street analysts who have commented on the class 
I focus on service and on their ability to deliver on that 
focus.
    The Chairman. That will be included.
    [The Information referred to follows:]

 Supplementary Information submitted by Edward R. Hamberger, President 
               and CEO, Association of American Railroads

    It is a fact of life in the rail industry that in addition to 
facing unrelenting competition, the service requirements of rail 
customers are continually becoming more stringent. Railroads recognize 
that service shortcomings have been a major factor behind shipper 
dissatisfaction in recent years, including shipper dissatisfaction that 
has manifest itself in calls for railroad reregulation.
    I am happy to say, though, that railroads have made tremendous 
progress in the customer service area, and look forward to continuing 
those improvements as we move forward. Shippers and others recognize 
these improvements. For example, Canadian Pacific (CP) and Union 
Pacific (UP) were recently awarded the Gold Award by DaimlerChrysler 
for demonstrated quality, the creation of value, and for delivering on 
its commitment to a reduction in total costs. For UP, this award comes 
on top of its recent receipt of Toyota's top award for logistic 
services excellence. Last month, Logistics Management and Distribution 
Report announced that six railroads had won the magazine's annual 
``Readers' Choice'' awards for excellence, up from two last year. The 
Burlington Northern and Santa Fe Railway (BNSF) was recently named 
Carrier of the Year by WalMart. In an April 2001 commentary in Traffic 
World, Phillip Yeager (founder and chairman of The Hub Group, North 
America's largest intermodal marketing company) said ``The railroads 
have been innovative and aggressive . . . . Extensive capital 
investments in rail services and new terminal facilities . . . are 
generating results and will have positive long-term effects on the 
intermodal network and the volumes it can handle efficiently.'' Also in 
April, Wall Street's SalomonSmithBarney wrote, ``[T]he North American 
rail industry finally appears to be ``on track,'' heading toward a 
level of operational homeostasis not witnessed in the sector for nearly 
a decade . . . The railroads are improving service to levels not seen 
in several years.'' And in the spring, the president and CEO of Arch 
Coal (the nation's second largest coal company) said, ``The rail system 
is running well. Railroads are offering great service and we have no 
complaints.''
    Indeed, one hears very little today of serious service problems on 
any major North American railroad. There may be isolated pockets here 
and there that have some problems (as one would expect on a rail 
network with so much trackage that it would circle the globe more than 
five times), but overall the U.S. freight rail system today is 
operating more fluidly than perhaps ever before. Merger-related service 
disruptions in both the west and the east are now a thing of the past, 
as the synergies and efficiencies that were the basis for the mergers 
in the first place are taking hold.
    The railroads' aggressive customer outreach program has provided a 
productive environment for identifying service issues and formulating 
solutions. We view this effort as a continuing campaign. For example, a 
chemical customer symposium will be held on October 24, 2001 in Houston 
to allow the chemical community and railroads to exchange ideas and 
comments on transportation topics of mutual interest.
    Indeed, nowadays it seems that hardly a week goes by without a 
major railroad announcing new alliances and customer service 
initiatives. Some examples from just over the most recent months 
include:

   BNSF expanded its premium guaranteed on-time intermodal 
        service program to include 12 lanes connecting numerous major 
        U.S. markets. BNSF began offering guaranteed intermodal service 
        in May 2000. For each load that does not meet the scheduled 
        availability time for customer pick-up, BNSF offers a 100-
        percent refund.

   Norfolk Southern (NS) and BNSF expanded a new seamless, non-
        stop coast-to-coast intermodal service begun earlier in the 
        year for time-sensitive premium freight moving between Southern 
        California and the East Coast. BNSF provides the line-haul 
        service between Southern California and Chicago, while NS 
        provides the line-haul service between Chicago and the East 
        Coast. The new service is expected to decrease transit times 
        between coasts by at least half a day and reduce cross-town 
        drayage in Chicago.

   CSX and BNSF announced enhancements to their interline 
        carload service through Chicago that improves transit time and 
        service consistency for hundreds of customers. The enhancements 
        eliminate handling in the congested Chicago area, thereby 
        improving consistency and resulting in a transit time reduction 
        of one to two days.

   UP and CSX added Philadelphia to their ``Express Lane'' 
        service for perishable goods from selected points in 
        California, Idaho, Washington, and Oregon to various points in 
        the East and Southeast. The railroads will reimburse a portion 
        of the shipping charge if the shipment does not arrive at its 
        destination on time. Since the start of Express Lane service in 
        April 2000, UP's and CSX's perishable shipments are up nearly 
        20 percent. One refrigerated rail car can transport as much as 
        three over-the-road trucks.

   Kansas City Southern and I&M Rail Link (a regional railroad) 
        announced a partnership to provide rapid run-through service 
        between Shreveport, Louisiana and Davenport, Iowa, bypassing 
        Kansas City and saving 48 hours of transit time on carload 
        traffic.

   Canadian National (CN) and CSX introduced a range of new 
        intermodal services connecting major Canadian and U.S. markets. 
        The CN-CSX marketing agreement offers shippers using CN in 
        Canada intermodal connections to major centers in the U.S. 
        Northeast, including New York, Boston, and Philadelphia, with 
        improved pricing response time and efficient interchange at the 
        Chicago and Buffalo gateways.

   The cooperative arrangement under which CP uses CN's modern 
        cross-border Samia tunnel in return for CN access to CP 
        trackage in the northeastern United States has continued. CP 
        gains sharply reduced transit times, more direct routings, and 
        reduced congestion on other lines. CN gains more direct and 
        quicker access to important U.S. markets. The big winners, of 
        course, are CN's and CP's U.S. customers.

    In addition to these and many other service offerings, railroads 
have embarked on major initiatives to embrace the Internet to improve 
customer service, reduce costs, and ease the burden of doing business 
with railroads. Most major railroads, for example, now offer 
comprehensive web-based car ordering, car tracing, pricing, and billing 
capabilities that are constantly being enhanced to better serve the 
shipping public. Just a few recent examples of other Web-based customer 
service offerings include:

   Earlier this year, most major North American railroads 
        launched an alliance to create an online marketplace for the 
        worldwide railroad industry that will allow firms to begin low-
        cost supply chain collaboration using only a Web browser. The 
        goal of the initiative, dubbed RailMarketplace.com, is to 
        create an open and neutral electronic exchange to link buyers 
        and sellers across the North American rail industry. It will 
        help participating railroads to reduce sourcing and transaction 
        costs, reduce purchasing cycle times, and expand the number of 
        available suppliers.

   UP announced the formation of a new logistics company that 
        will use the Internet to track up to three million Chrysler 
        vehicle shipments annually from assembly plants to dealers 
        across North America. According to press reports, Chrysler 
        expects improvements in process control, transportation 
        planning, information flow and shipment visibility due to the 
        initiative will lead to a 30 percent (3-4 day) reduction in 
        vehicle delivery times within 12 months.

   BNSF announced a plan to offer guaranteed availability and 
        placement of refrigerated boxcars through its Loading Origin 
        Guarantees (LOGS) program. The LOGS Program, an online auction, 
        was initially introduced by BNSF in January 2000 to enhance 
        equipment efficiency for center beam railcars. It has since 
        been expanded to include plain boxcars and now refrigerated 
        boxcars. BNSF will guarantee the availability and placement of 
        empty rail-owned or controlled refrigerated boxcars for the 
        scheduled shipping period or pay a default payment.

   NS launched an Internet system that gives customers the 
        ability to order rail cars for loading the following week or up 
        to several weeks in advance. NS's new eCARS system is just one 
        of a suite of Internet-based e-commerce applications the 
        company has developed. All of them are designed to reduce 
        costs, improve efficiency, and allow the railroad to serve it 
        customers more reliably and cost-effectively.

    Railroad innovations continue apace in the area of train operations 
as well. For example, in August 2001, CSX announced the development of 
a new locomotive operating system designed to significantly reduce 
locomotive fuel consumption and nitrous oxide (NOx) emissions. The new 
system incorporates an auxiliary power unit that automatically shuts 
down the main locomotive engine idle, while maintaining all vital main 
engine systems at greatly reduced fuel consumption. Like the Internet-
based innovations noted above, enhancements in locomotive operations, 
equipment utilization, and other areas of rail operations help position 
railroads as efficient, cost-effective partners with their customers.
    Meanwhile, work continues in Chicago on an industry-wide effort to 
improve service reliability in the densest rail area (1200 trains per 
day) in the nation. In April 1999, the railroads established the 
Chicago Planning Group to examine processes in place and recommend 
improvements. While further work remains to be done, the Group's 
efforts have already succeeded in greatly improving communication 
linkages and the information transmitted through them, making 
dispatching more efficient, reducing recrews, enhancing winter weather 
contingency plans, and more. Illustrations of the real difference this 
industry effort has produced include a 46 percent improvement in 
transit time and a 30 percent decrease in dwell time during winter 
weather; a 60 percent reduction in freight train interference with 
commuter train operations; and a 40 percent improvement in rail 
operating efficiency. In just the past three years, freight railroads 
have invested more than $635 million into capital projects and 
maintenance in the Chicago area.
    These numerous examples of the intensive railroad efforts to 
improve their service underscore the fact that the vastly improved 
service performance experienced by railroads in recent times is not 
accidental. Instead, it is the result of these efforts by railroads, 
working with their customers and suppliers, to pursue enhancements 
necessary for the rail system to operate as efficiently, reliably, 
safely, and cost-effectively as possible. In many cases, railroads find 
that they must entirely reconstitute the service offerings from the 
``ground up'' in order to effectively design reliability into the 
service.

    Mr. Hamberger. Thank you, sir. Thank you for the 
opportunity to update the Committee on issues related to 
railroad security, and to discuss AAR's views on S. 1530. As I 
discussed in testimony with Chairman Breaux's Subcommittee on 
October 2, in the immediate aftermath of the attacks on 
September 11, railroads tightened security and intensified 
inspections across their systems. Since then, the industry has 
implemented numerous security enhancements.
    The AAR now operates a 24-hour command center linked to 
federal and national security personnel, as well as to the 24-
hour railroad operations centers, and I want to emphasize the 
importance of the accuracy and timing of the intelligence data. 
It allows us to allocate our resources, and I also want to 
emphasize that that is a two-way street.
    Not only do we receive data from the intelligence 
community, but because of the enhanced safety and security 
briefings that our over 200,000 employees have received, they 
are on a heightened level of vigilance, and so they are viewed 
by the security agencies as 200,000 sets of eyes and ears to 
gather information and, as they see things that deserve 
reporting, we pass that back up the line to the FBI and others.
    We have increased infrastructure protection through 
measures such as video surveillance and computer card access 
systems, we have restricted access to sensitive web-based 
systems, and certain trains have had their operations modified 
as appropriate. While the industry has already implemented a 
number of steps to enhance security, it has become increasingly 
clear through the work of the five critical action teams I 
discussed last month, authorized by the AAR board, that 
substantial additional costs will be incurred to continue 
operating the railroad safely.
    Consequently, we believe it would be entirely appropriate 
for Congress to establish a freight rail security fund to 
reimburse railroads for certain expenditures necessary to meet 
the security needs identified in a vulnerability assessment and 
security needs analysis.
    The industry also believes it would be appropriate to 
provide railroads with liability limits for acts of terrorism 
similar to the relief provided airlines. Like many other 
industries, we are finding it impossible to purchase terrorism 
insurance, but unlike most other industries, we have a common 
carrier obligation that precludes us from exiting markets where 
there may be otherwise economically unacceptable levels of 
risk.
    Turning to S. 1530, we support the increase in the amount 
of low interest loans available to railroads through the 
railroad rehabilitation improvement financing program, from 
$3.5 to $35 billion. This could help both shortline and class I 
railroads meet their capital requirements in the future.
    We also fully support the Rail-21 provision that would 
provide $350 million annually for 3 years to help the non-class 
I railroads improve their infrastructure, meet the challenge of 
the 286,000 pound freight car, and consequently aid in the 
economic support of rural America.
    Rail-21, of course, authorizes $50 million in matching 
grants annually for 3 years to assist in the development of 
high-speed rail in selected corridors throughout the country, 
and as this debate that has been going on so vigorously this 
morning--it has been a great public policy experience to sit 
here and watch it. Freight railroads have long expressed their 
willingness to cooperate in good faith in the extension and 
advancement of high-speed passenger service, but it must be 
understood that new passenger services should not, cannot 
compromise the operational efficiency, the economics, or the 
safety of the existing freight rail network.
    If the goal of passenger rail service is to address 
environmental, energy, and congestion issues, I submit it is 
counterproductive if, in the process of moving people out of 
their cars into trains, we end up moving freight off those 
trains into trucks and back on those same highways we are 
trying to decongest.
    Our privately owned freight railroad system is a tremendous 
national asset. The U.S. freight railroads move more freight 
more efficiently and at lower rates than anywhere else in the 
world. Indeed, our Nation's global economic supremacy is 
derived in large part from domestic transportation resources, 
all modes, that are second to none. Going forward, we must 
ensure that railroads remain capable of handling the increasing 
demands placed upon them.
    Legislative changes such as rail retirement reform, repeal 
of the discriminatory 4.3 cent per gallon deficit reduction 
fuel tax, and enactment of S. 948, the Community Rail Line 
Relocation Assistance Act, would add greatly in this effort. 
So, too, Mr. Chairman, would the creation of a rail security 
fund and the enactment of provisions of your bill, Rail-21, 
providing funding for shortline railroads and expanding the 
RRIF program. The rail industry looks forward to working with 
you and the rest of the Committee on these critical issues.
    Thank you.
    [The prepared statement of Mr. Hamberger follows:]

     Prepared Statement of Edward R. Hamberger, President and CEO, 
                   Association of American Railroads

    On behalf of our members, thank you for the opportunity to meet 
with you today to update this Committee on issues related to railroad 
security and to discuss the Association of American Railroads' (AAR) 
views on S. 1530, The Railroad Advancement and Infrastructure Law of 
the 21st Century (RAIL-21). AAR member railroads account for the vast 
majority of rail mileage, employees, ton-miles, and revenue in Canada, 
Mexico, and the United States.

Rail Industry Security Actions
    To begin, I would like to update you on what the U.S. freight 
railroad industry is doing to safeguard the nation's rail freight 
transport system in response to the September 11 terrorist assault, and 
suggest tangible ways that this Committee and others in Congress could 
assist in this critical effort.
    Railroads are indispensable to the economic and physical well-being 
of our nation--they transport more than 40 percent of U.S. intercity 
freight, including approximately two-thirds of coal used by coal-fired 
power plants, some 70 percent of motor vehicles, huge amounts of grain 
and chemicals, and countless other commodities. In addition, the 
Department of Defense relies on freight railroads to move ordnance and 
supplies--in times of peace and in times of war. The Military Traffic 
Management Command (MTMC) has designated 30,000 miles of rail 
corridors--known as the Strategic Rail Corridor Network (STRACNET)--as 
essential to the national defense. The railroads maintain a close 
working relationship with the military to determine immediate and 
ongoing military traffic requirements and to identify capacity, 
security, and equipment needs of the industry to meet military demand.
    Railroads are proud of the success they have achieved since 
September 11 in keeping our nation's vital rail-transport link open. 
Nevertheless, we know that terrorist actions against freight railroads 
could result in significant economic and military disruptions, and 
possibly even create serious public health risks.
    As I discussed in testimony to this Committee on October 2, in the 
immediate aftermath of the attacks on September 11, railroads tightened 
security and intensified inspections across their systems. Since then, 
the rail industry has implemented numerous security enhancements. The 
AAR now operates a 24-hour command center linked to federal national 
security personnel and the railroads' operations centers. This linkage 
dramatically increases our access to intelligence information and our 
ability to share that information on a real-time basis with the 
railroads. I cannot overstate the importance of timely and accurate 
intelligence information to allow railroads to take appropriate action 
based on the level of threat.
    Railroads have delineated graduated security procedures that can be 
implemented based upon the current level of threat, and railroad police 
are guarding certain critical infrastructure on a 24-hour basis. The 
industry has increased infrastructure protection through measures such 
as video surveillance and computer card access systems, and has 
restricted access to sensitive Web-based information systems. Certain 
shipments are now subject to increased surveillance and rerouting. And 
the industry is continuing to provide emergency response training to 
railroads, fire and police departments, emergency response officials, 
and other military and government officials.
    Further, as detailed in my earlier testimony, the railroad industry 
established five Critical Action Teams to assess both short-term and 
long-term security needs in light of the increased threats to our 
nation. These teams are: information technology and communications, 
physical infrastructure, operational security, hazardous materials 
transport, and military preparedness. In consultation with outside 
counter-terrorism experts retained by the rail industry, these teams 
are making significant progress in evaluating threats to the rail 
system and in devising appropriate countermeasures.

Railroad Security Fund
    The work of the Critical Action Teams and the analyses and actions 
taken to date will form the basis for additional measures the rail 
industry believes to be necessary to enhance the security of our 
nation's freight rail network. Indeed, while the rail industry has 
already implemented a number of steps to enhance security, the enormity 
of the challenge we face--and the substantial costs that will be 
incurred to continue operating the railroads safely--are now becoming 
clear.
    In that regard, it has become evident that, to ensure that the 
American people are protected and that the nation's economic and 
military framework continues to function, a freight rail security fund 
should be established immediately. This fund would reimburse railroads 
for certain expenditures already incurred and those necessary in the 
future to help meet the security needs identified in the vulnerability 
assessment and security needs analysis we are conducting in cooperation 
with federal authorities. These costs could include rerouting and 
special handling of certain hazardous materials; security and 
redundancy for critical communications and train control systems; 
investment in physical hardening of critical infrastructure; increased 
surveillance by security personnel; and research and development to 
support security needs.

Insurance and Liability Relief
    Through no fault of its own, the railroad industry today is faced 
with an insurance crisis. As I noted on October 2, insurers have 
notified railroads that coverage of terrorist acts will soon be 
eliminated completely or drastically reduced, and premiums for 
remaining coverage will rise substantially.
    Certain products that railroads carry are vital to personal health 
and our nation's economy but have the potential to be misused. Because 
of their importance in legitimate end uses, however, the transportation 
of these products cannot simply be halted without causing enormous 
harm. Moreover, as common carriers, railroads are required by statute 
to transport commodities tendered to them, including commodities 
classified as hazardous materials (a small percentage of which if 
subject to a terrorist incident have the potential for serious 
consequences). Thus, railroads cannot limit potential risks in the same 
way that firms in other industries can limit their risks. Yet without 
adequate insurance, the ability of railroads to continue to haul these 
products efficiently and cost effectively would be severely threatened.
    Railroads recognize their own responsibility to obtain and pay for 
appropriate insurance coverage. However, because the circumstances 
facing railroads today are so extraordinary and because the potential 
costs associated with a major terrorist act could be so extreme, it is 
logical and appropriate for the federal government to assume the role 
of insurer of last resort. Consistent with the assistance provided 
airlines, the federal government should address the railroad insurance 
crisis by limiting the rail industry's liability for acts of terrorism. 
Railroads also endorse Congressional efforts to make insurance for acts 
of terrorism available on reasonable commercial terms.
    It is worth emphasizing that the rail industry takes very seriously 
its responsibility to both continue to provide the critical 
transportation services our nation depends on, and to take actions 
necessary to safeguard the security of its employees, the communities 
it serves, and our nation.

RRIF Program Expansion
    The AAR appreciates that RAIL-21 could help freight railroads make 
additional investments in service-enhancing infrastructure projects, 
while also providing critical funding to support passenger railroading 
in this country.
    For example, the AAR is pleased that S. 1530, like H.R. 2950 (on 
which I testified to the House Committee on Transportation and 
Infrastructure on October 2), greatly increases--from $3.5 billion to 
$35 billion--the amount of low-interest loans and loan guarantees 
available to the railroad industry through the Railroad Rehabilitation 
and Improvement Financing (RRIF) program. This major expansion could 
help both short line and Class I railroads to continue to provide safe 
and efficient transportation service that enhances our nation's 
economic health and global competitiveness.
    The AAR also strongly appreciates efforts in S. 1530 to countermand 
the existing regulatory barriers pertaining to RRIF program 
eligibility, particularly the lender of last resort provisions and the 
collateral requirements. Eliminating these excessive regulatory 
requirements will make the RRIF program more attractive to railroads of 
all sizes.

Short Line Railroad Capital Grant Program
    Operating nearly 50,000 miles and employing more than 23,000 
workers, the more than 550 non-Class I U.S. freight railroads play a 
vital role in our nation's rail freight transportation system--
especially by connecting rural areas to the national rail network. 
However, the infrastructure of many of these smaller, lower density 
railroads cannot support the operation of the rapidly-increasing number 
of heavier rail cars that are required for railroads to offer 
competitive, economical service to their customers. Absent outside 
sources of funding, many of these smaller railroads will be unable to 
upgrade their lines. Eventually, many of these lines could be 
abandoned. If this happened, countless communities would be cut off 
from the national rail network, resulting in serious economic 
displacement, reduced transportation options for shippers, and 
significant harm to rural roads as traffic previously moving by rail 
was diverted to truck.
    To this end, the AAR strongly supports the efforts of RAIL-21 to 
provide $350 million annually for three years to help smaller railroads 
rehabilitate, preserve, or improve their infrastructure; meet the 
challenge of ``286,000-pound'' cars; and aid in the economic support of 
rural America.

High-Speed Rail
    RAIL-21 reauthorizes the Swift Rail Development Act and provides 
matching grants to assist in the development of high-speed rail in 
selected corridors throughout the country. The development of high-
speed rail could help alleviate highway and airport congestion, 
decrease dependence on foreign oil, reduce pollution, and reduce 
injuries and fatalities associated with automobile and truck 
transportation. Freight railroads recognize these public benefits, and 
have long expressed their willingness to cooperate in good faith in the 
extension and advancement of high-speed passenger service.
    Most proposals to expand passenger railroad service assume the 
ability to use existing freight railroad rights-of-way for that 
purpose. However, proponents of passenger rail of all types must 
understand that to arbitrarily superimpose passenger operations on the 
freight rail network without regard to its effects on freight railroad 
operations would compromise safety and hamstring the efficiency and 
financial health of the nation's freight delivery system. The goals of 
reducing pollution and highway congestion, and enhancing safety and 
energy efficiency, by expanding rail passenger service will not be 
realized if passenger trains interfere with freight service and force 
thousands of truckloads of freight back onto the highways. Therefore, 
public policy requires that passenger service not degrade the ability 
of freight railroads to serve their customers.
    Moreover, it must be acknowledged that the expansion of high-speed 
passenger rail service throughout the United States presents genuine 
challenges. Among other things, in order to operate safely and 
effectively, high-speed passenger rail operations require the 
construction of separate, dedicated tracks and ``sealed'' corridors. To 
seal a corridor, grade crossings must be eliminated (either through 
closure or through the construction of highway underpasses or 
overpasses). These are exceedingly expensive undertakings and will 
require firm, continued commitments by the appropriate authorities if 
high-speed rail projects are to succeed.
    Further, the AAR believes that sponsors of high-speed rail projects 
that desire to use existing freight railroad corridors should have to 
negotiate an arms-length, written agreement with the owning freight 
railroad before bonds to finance the project can be issued or other 
means of financing can be launched. The written agreement should cover 
terms of use of the freight corridor, including compensation for such 
use and liability issues, as well as assurances regarding the adequacy 
of infrastructure capacity to accommodate both existing and future 
freight and passenger operations.

Extension of Amtrak's Authorization
    Throughout its history, Amtrak has faced recurring questions 
concerning its funding needs and the proper role it should play in our 
nation's transportation system. In a May 24, 2001, speech to the 
National Press Club, Amtrak President George Warrington asked, ``If 
you're a public service provider, you go where the community need is; 
if you're a business, you go where the money is. But if you're Amtrak, 
which way do you go?'' Mr. Warrington suggested that Congress should 
address several critical policy questions, among them, ``What should 
the national intercity rail system be? . . . Should the system cover 
the costs of public services that don't pay for themselves? . . . And 
how much capital will be provided to support this system, and where 
will it come from?'' He summed up Amtrak's dilemma when he told The 
Wall Street Journal earlier this year that ``We tend to live hand to 
mouth, year to year, and it's no way to run a railroad.''
    I respectfully suggest that Mr. Warrington is correct when he says 
that this Committee and the Congress need to undertake a reflective, 
comprehensive debate on the role that Amtrak should play as part of our 
nation's intercity transportation system. When Amtrak's mission is 
clearly defined, Congress must be willing to commit resources 
commensurate with that role. For their part, freight railroads will 
continue to work cooperatively with Amtrak to help it fulfill its 
mission.
    Finally, although it is not currently part of RAIL-21, the AAR 
supports efforts to provide financial assistance for local rail line 
relocation projects, as found in S. 948, the Community Rail Line 
Relocation Assistance Act of 2001. Relocation of existing rail lines in 
some areas may provide public benefits by improving the flow of motor 
vehicle traffic, enhancing safety, and contributing to economic 
development.

Conclusion
    Our privately-owned freight railroad system is a tremendous 
national asset, essential to our nation's economy and defense. U.S. 
freight railroads move more freight, more efficiently, and at lower 
rates than anywhere else in the world. Indeed, our nation's global 
economic supremacy is derived in large part from transportation 
resources--including freight railroads--that are second to none.
    Going forward, we must ensure that railroads remain capable of 
handling the increasing demands placed upon them. Railroads are 
committed to doing their part to enhance security, advance safety, 
improve service, maintain their infrastructure, and offer their 
customers reasonable rates. If railroads are to continue to provide 
safe, efficient, and cost-effective transportation service that 
enhances our nation's economic competitiveness and supports our 
national defense, the industry's massive capital needs must be met. 
Legislative changes such as railroad retirement reform (S. 697) and 
repeal of the discriminatory 4.3 cents per gallon deficit reduction 
fuel tax (part of S. 661) would aid greatly in this effort. So too 
would the creation of a rail security fund and the enactment of 
provisions of RAIL-21, including funding for short line railroads and 
the expansion of the RRIF program.
    The rail industry looks forward to continuing to work with you to 
address these critical issues.

    The Chairman. Mr. Turner.

           STATEMENT OF FRANK TURNER, PRESIDENT AND 
         CEO, AMERICAN SHORTLINE AND REGIONAL RAILROAD 
                          ASSOCIATION

    Mr. Turner. Thank you, Mr. Chairman. Our association, the 
American Shortline and Regional Railroad Association, 
represents approximately 500 class II and III railroads that 
together operate approximately 50,000 miles of track, or just 
under one-third of the Nation's route miles, but we generate 
only 9 percent of the railroad industry's gross revenues.
    I want to thank you for introducing this legislation, for 
making rail transportation a subject of conversation as 
Congress considers the options for an economic stimulus 
package. As Mr. Hamberger just stated, our railroad system is a 
tremendous national asset. Railroads played a critical role in 
the Nation's transportation system before September 11, and may 
become even more important as we address other transportation 
issues in the future.
    My primary interests are those of shortlines and regional 
railroads, and I would like to concentrate on portions of S. 
1530 that relate to that portion of the industry. S. 1530 
includes legislation previously introduced by Senator Breaux 
and cosponsored by a strong bipartisan group of Senators, 
including Senators Brownback, Durbin, Grassley, Schumer, Smith, 
Specter, and Wyden. The legislation provides, as Mr. Hamberger 
mentioned, $350 million per year for 3 years to rehabilitate 
shortline infrastructure.
    The shortline industry is what keeps thousands of small 
shippers connected to the national rail mainline network. It 
does so over track that was very marginal in the class I system 
because it never generated enough traffic to justify sufficient 
and substantial capital investment. With a lower cost structure 
and more flexible service, shortline companies that purchased 
this track have been able to keep the lines going. However, our 
revenues are still not enough to make up forth past years of 
minimal maintenance.
    Two factors combine to bring us to a situation today to a 
head, first, again as has been mentioned, the heavier 286,000-
pound cars that are becoming the standard of the class I 
industry, and secondly, as class I's insist on premium speed 
and precise schedule operations, our segment of the industry 
must meet these higher standards or face being cut off from the 
national system.
    Over a year ago, our association commissioned an assessment 
by a highly respected rail analytical firm called Zeta-Tech. 
That study found that of our 550 shortlines and regional 
railroads we needed basically $7 billion to upgrade their 
physical plant to allow for a safe and effective long-term 
operation under this new generation of heavier freight cars.
    According to that study, 22 percent of all shortline rails 
must be replaced, and over half of our bridges must either be 
replaced or receive heavy repairs. The requested funding does 
not create a long-term program fix to this problem. It is a 
one-time infusion. In combination with the RRIF loan program, 
the funding provides the capital that would be needed to bring 
our infrastructure up to a level that reduces operating cost 
and helps us win back the traffic that we need to generate an 
investment in the future.
    Keeping America's rural shippers connected to the national 
railroad system is important under any circumstances. Perhaps 
today it is even more important. The Federal Government is 
surveying all of America's railroads to determine the location 
of critical infrastructure assets such as bridges and tunnels, 
and how and where we move hazardous material near large 
population centers.
    Today, America's entire transportation system is under 
duress, and we should be concerned that America's entire 
transportation infrastructure is up to the task. In the 
shortline instance, 20 percent of all of our customers ship 
hazardous materials over our lines. I suspect this number will 
go up.
    Because the likely legislative vehicle for this funding is 
the economic stimulus package, I want to emphasize two points. 
First, money spent on capital programs can be spent 
immediately. Replacing ties and rails and rebuilding equipment 
is an ongoing process for our railroads. Engineering and 
planning has been done a long time ago.
    Second, a large portion of this investment involves the 
purchase of rail. As mentioned, our $7 billion that is needed, 
$3.7 billion of this is for rail, and we all understand, I 
believe, the hard times of the steel industry, and our members 
have agreed that any new rail purchased will be wholly rail 
that has been rolled or manufactured in the United States.
    Lastly, I would also like to endorse S.R. 948, that 
provides financial assistance for moving rail lines out of 
cities. It was introduced, as we heard, by Senator Lott and 
Senator Kerry, and we certainly support that. Railroad traffic 
mixes poorly with automobile traffic in many cities, creating 
congestion and raising many safety issues, and we would also 
like to see success with S. 948.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Turner follows:]

        Prepared Statement of Frank Turner, President and CEO, 
         American Short Line and Regional Railroad Association

    Mr. Chairman and Members of the Committee, my name is Frank Turner 
and I am President of the American Short Line and Regional Railroad 
Association. I appreciate the opportunity to appear here today. ASLRRA 
represents approximately 500 Class II and III railroads that together 
operate approximately 50,000 miles of track, or just under one third of 
America's railroad route mileage.
    Mr. Chairman, I want to start by thanking you for introducing this 
legislation and for making rail transportation a subject of 
conversation as Congress considers the options for economic stimulus. 
As Mr. Hamberger has said, our railroad system is a tremendous national 
asset. Railroads played a critical role in our nation's transportation 
system before September 11th and may become even more important as we 
address transportation issues in the future.
    Because my primary interests are those of the short line and 
regional railroads I would like to concentrate on the portions of S. 
1530 that relate to that portion of the industry. S. 1530 includes 
legislation previously introduced by Senator Breaux and co-sponsored by 
a strong bipartisan group of Senators including Senators Brownback, 
Durbin, Grassley, Schumer, Smith, Specter and Wyden. The legislation 
provides $350 million per year for three years to rehabilitate short 
line infrastructure.
    The short line industry is what keeps thousands of small shippers 
connected to the national railroad main line network. It does so over 
track that was very marginal in the Class I system because it never 
generated enough traffic to justify sufficient investment. With a lower 
cost structure and more flexible service, short line companies that 
purchased this track have been able to keep the lines going. However, 
the revenue is still not high enough to make up for past years of 
neglect. Today, small railroads operate just under one third of the 
nation's total railroad miles, but these miles generate only 9 percent 
of the railroad industry's gross revenues.
    Today, two factors have combined to bring this situation to a head. 
First, the advent of the heavier 286,000-pound cars that are becoming 
the standard of the Class I industry require substantially higher 
investment in the track. Second, as the Class I industry puts a greater 
premium on speed and precisely scheduled operations, the short line 
railroads must meet these higher standards or be cut off from the 
national system.
    Over a year ago, ASLRRA commissioned an assessment by the highly 
respected rail analytical firm Zeta-Tech. That study found that our 550 
short line and regional railroads need $6.86 billion to upgrade their 
physical plant to allow for safe and effective long term operation 
under the new generation of heavier freight cars. According to that 
study 22 percent of all short line rail must be replaced and over half 
of all short line bridges must either be replaced or receive heavy 
repairs.
    The requested funding does not create a long-term program to fix 
this problem, but instead creates a one-time fix for this problem. In 
combination with the RRIF loan program, the funding provides the 
capital needed to bring our infrastructure up to a level that reduces 
operating costs and helps short lines win back the traffic needed to 
generate private investment in the future.
    Keeping America's rural shippers connected to the national railroad 
system is important under any circumstances. Today it is even more 
important. The events of September 11th have caused major disruptions 
in all our transportation systems. As we sit here today, truckers are 
lined up for miles waiting for additional inspections and the federal 
government is surveying all of America's railroads to determine the 
location of critical infrastructure assets such as bridges and tunnels 
and how and where we move hazardous materials near large population 
centers. Today, America's entire transportation infrastructure is under 
duress and we should be concerned that America's entire transportation 
infrastructure is up to the task. In the short line industry, for 
instance, 20 percent of all of our customers ship hazardous materials 
over our lines. That number may well go up, as the nation's short lines 
become a way for hazardous material shippers to transport their product 
around heavily populated areas.
    Because the likely legislative vehicle for this funding is the 
economic stimulus package, I want to emphasize two points. First, money 
spent on railroad capital programs can be spent immediately. Replacing 
rails and ties and rebuilding equipment is an on-going process for 
railroads. The engineering and the planning were done long ago. Unlike 
highways, we control our right-of-way and the timing of our traffic. To 
double or triple the number of rails and ties we install requires 
virtually no additional lead-time. Over the last two weeks we have 
surveyed our entire membership and found that together the short line 
railroads could spend over $400 million on infrastructure improvements 
in the next three months and over $1.2 billion in the next six months. 
Over 6,000 workers would be employed for the three-month period and 
nearly 9,500 workers would be employed for the six-month period. These 
jobs would be in addition to the railroad's in-house work forces.
    Second, a large portion of this investment involves the purchase of 
rail and the short line members have agreed that they will purchase 
only US made rail with this money.
    The money we are seeking in this legislation supplements the RRIF 
loan program. We applaud both the increased RRIF loan authority 
proposed in S. 1530 and the provisions that attempt to improve the 
program's regulatory regime. Those improvements will make the RRIF 
program easier to use and will speed up the infrastructure investment 
this program was intended to facilitate.
    Finally, I want to make mention of S. 948, which provides financial 
assistance for moving rail lines out of city centers. This legislation 
was introduced by Senator Lott and Senator Kerry in May and the ASLRRA 
strongly endorses this legislation. Like the other items I have touched 
on today, this legislation addressed an important issue even before 
September 11th. Railroad traffic mixes poorly with automobile traffic 
in many city centers, creating congestion problems and raising safety 
issues. Since September 11th, there is increasing emphasis on how we 
move traffic, particularly hazardous materials away from highly 
populated areas. Senator Lott's legislation would be an appropriate and 
important step in addressing that issue, and I would urge the Committee 
to include that legislation in the final stimulus package.

    The Chairman. Thank you. Mr. Wytkind.

       STATEMENT OF EDWARD WYTKIND, EXECUTIVE DIRECTOR, 
           TRANSPORTATION TRADES DEPARTMENT, AFL-CIO

    Mr. Wytkind. Thank you, Mr. Chairman, Members of the 
Committee. I am pleased to appear on behalf of 33 
transportation unions who are affiliated with the 
Transportation Trades Department, especially the 12 railroad 
unions that represent most of the 20,000 workers at Amtrak and 
the 200,000-plus in the freight rail industry.
    I want to thank you, Mr. Chairman, for your work on 
transportation security and, in particular, you have gone out 
of your way to ensure that our input, the input of the 
employees in this industry, have been at the table front and 
center to make sure that, as you assess security and 
vulnerability issues in this industry, that we are a part of 
that process.
    The horrific attacks on this country that occurred have 
really brought us to an important point in time in dealing with 
security enhancements and, of course, the sagging economy that 
we are all struggling to address. We must dedicate ourselves to 
expanding the transportation system and making sure it is 
prepared for the security vulnerabilities that it is now facing 
as a result of September 11, and to prevent further 
dislocations in the economy and breaches in the system as far 
as security is concerned.
    We support most of the principles, if not all embodied in 
your legislation S. 1530. We also believe the Senate needs to 
act quickly on a robust transportation stimulus package that 
addresses not only security issues but investment issues such 
as those you have been posing, Mr. Chairman, and the homeland 
security proposals that your colleagues, Senator Robert C. 
Byrd, and Senator Harry Reid have also been proposing.
    We have been working very hard to make Rail-21 a success. 
We have worked to ensure that workers are treated fairly in 
this legislation, and to make sure that investments in rail 
security are adequate to meet the Nation's needs. We will 
continue to address the issues of importance to railroad 
workers to protect their jobs and rights and their retirement 
security.
    Rail workers also need security protections on the job, 
which I will not take the time of the Committee now to discuss, 
but we want to be able to bring to you in detail some of the 
issues that many of our railroad unions have been addressing on 
the job, where they see the vulnerabilities for their members.
    Let me just say that I think, I have worked with Ed 
Hamberger for many years, but freight rail management, from 
reports I am receiving, needs to do a better job of 
communicating with the employees and, of course, their railroad 
union representatives, as all these new security directives are 
being implemented, both unilaterally and by our Government.
    We also need Congress at this important time in our history 
to deal with rail security and safety issues in the context of 
a rail safety authorization. We think that railroad industry 
attempts in the past to stonewall rail safety reauthorization 
needs to be set aside in the interest of the country and the 
interest of safety on our transportation system.
    Now, on this point we agree wholeheartedly with the 
railroad industry. We do need to pass and enact the rail 
retirement legislation which now enjoys the support of more 
than 80 Senators.
    Rail-21 represents an important step in the history and the 
future of Amtrak. We endorse the funding mechanisms in your 
legislation, as long as it is appropriate protections from 
employees are applied, and we have been communicating that to 
your staff.
    Access to funding will allow for important enhancements in 
security, high-speed rail development, and upgrades in 
technology. We will work tirelessly to ensure adequate long-
term investments in passenger rail and Amtrak, but in a manner 
that upholds the values and the rights of the working men and 
women who we believe form the backbone of the rail system.
    I might add, we do not agree with the freight rail 
industry's call for repeal of the 4.3 cent fuel tax. We think 
the call for that tax rollback is inappropriate, and especially 
so, given the many unmet needs of this industry's employees, 
this industry's security needs, and the country's 
transportation needs.
    As we witnessed in the days and weeks after September 11, 
Amtrak filled a huge void left behind by the grounding of all 
air operations. Despite its precarious state, as Mr. Warrington 
has stated, they have added more cars and service, they honored 
stranded airline passengers' tickets, they stretched their 
resources and, of course, they implemented, without any 
additional assistance, security enhancements both for 
passengers and employees, and we appreciate that.
    Never has Amtrak's value been so clear as it is today. It 
is at a crossroads, as we well know. We ask a lot of our 
passenger rail system, Amtrak. It must be all things to all 
people, yet we do not provide it with the resources it needs to 
thrive and, frankly, to survive. We have seen the results of 
underinvestment in Amtrak, delayed maintenance, deferred 
procurement of trains and equipment and new services across the 
country and, of course, dilapidated bridges and tunnels, and 
lastly, the wages of employees have suffered, as they now 
continue to be the lowest paid in the railroad industry.
    We have long supported funding in transportation like TEA-
21 and AIR-21. We have always supported a balanced approach to 
transportation, but at the same time, these record investments 
that these bills brought forward have again underscored the 
fact that we continue to underinvest in Amtrak and in the 
security needs of passenger rail.
    That is why we commend you, Mr. Chairman, and others on 
this Committee for finally calling self-sufficiency what it is. 
It is a charade. It needs to be eliminated. The whole idea that 
we can run a publicly financed, publicly run transportation 
system for passengers under a self-sufficiency mandate is not 
only arbitrary, but it is absolutely unrealistic, and it is not 
done anywhere else in the world.
    We are also concerned that that self-sufficiency trigger, 
combined with what we think is a very sinister agenda of the 
majority at the Amtrak Reform Council, threatens Amtrak and its 
workers and passenger rail service, and it threatens to bring 
this whole situation into an economic downward spiral that may 
not be retrievable. We applaud Rail-21's rejection of self-
sufficiency, and will work with you to get that accomplished.
    I also want to associate myself with the comments of 
Senator Fitzgerald, who I know is not here any more, but we 
agree that at a time when Amtrak continues to face far too much 
criticism, the House is poised to vote on a piece of 
legislation that would shore up the financial difficulties 
being faced by airline CEO's as a result of the airline bail-
out bill. We find that grab to be outrageous, and we hope that 
the Senate will reject it, should the House adopt it.
    We strongly endorse emergency security authorization for 
Amtrak and commend you, Mr. Chairman and this Committee, for 
acting so quickly and just hope, as you said earlier, that they 
move on that very quickly.
    Lastly, I just want to say that these are very important 
times for our country. Amtrak is truly at a crossroads. Its 
20,000 workers are committed to making Amtrak a success, but 
you need to give Amtrak the tools and the resources it needs to 
accomplish what it can accomplish for the country, and we look 
forward to making that happen with you.
    Thank you.
    [The prepared statement of Mr. Wytkind follows:]

       Prepared Statement of Edward Wytkind, Executive Director, 
               Transportation Trades Department, AFL-CIO

    Mr. Chairman and Members of the Committee, my name is Edward 
Wytkind. I am the Executive Director of the Transportation Trades 
Department, AFL-CIO (TTD), which consists of 33 affiliated unions 
across the entire transportation industry, including the 12 rail unions 
that make up our Rail Labor Division. \1\ We appreciate this 
opportunity to appear before you on behalf of transportation workers 
and, specifically, to bring to this Committee the perspective of rail 
employees across the nation, including the 20,000 dedicated men and 
women who operate, maintain and build Amtrak's national passenger rail 
system.
---------------------------------------------------------------------------
    \1\ As part of our 33 member organization, the following unions 
belong to our Rail Labor Division: American Train Dispatchers 
Department; Brotherhood of Locomotive Engineers; Brotherhood of 
Maintenance of Way Employes; Brotherhood of Railroad Signalmen; Hotel 
Employees and Restaurant Employees Union; International Association of 
Machinists and Aerospace Workers; International Brotherhood of 
Boilermakers, Blacksmiths, Forgers and Helpers; International 
Brotherhood of Electrical Workers; National Conference of Firemen & 
Oilers/SEIU; Sheet Metal Workers International Association; 
Transportation  Communications International Union; and 
Transport Workers Union of America.
---------------------------------------------------------------------------
    First, Mr. Chairman, let me take this opportunity to thank you for 
your leadership on the broader issue of transportation security. Since 
the tragic events of September 11, the security and vulnerability of 
our nation's transportation system has received much attention, and 
rightfully so. Transportation labor appreciates this Committee's 
efforts to address security issues across all the modes of 
transportation and we are pleased to be part of the deliberation today 
about rail security and the future of our rail system.
    As we move forward as a nation to respond forcefully to the 
horrific terrorist attacks carried out through our transportation 
system, we believe that now is the time to address not only critical 
security enhancements, but the nation's economic needs in the aftermath 
of September 11. As part of that effort we must dedicate ourselves to 
rehabilitating and expanding the nation's transportation system to 
prevent future dislocations to our economy and security.
    We believe that several of the principles embodied in S. 1530, the 
Rail Advancement and Infrastructure Law of the 21st Century (RAIL-21), 
are important steps in that direction. The leaders of transportation 
labor who serve as members of our Executive Committee also believe that 
it is imperative to include robust transportation investments in any 
stimulus package passed by the Senate (see attached policy statement).
    Mr. Chairman, transportation labor and the building and 
construction trades unions have worked with your staff to offer input 
on RAIL-21 and we want to continue that dialogue to advance a bill that 
both ensures that workers are treated fairly and provides important 
investments in rail infrastructure and security. We hope that we can 
continue to work together during the committee process and as this bill 
moves to the Senate floor to address issues that are of importance to 
rail workers including the need to protect their jobs and rights, and 
their retirement security.
    RAIL-21 represents not only an important investment in Amtrak as we 
know it today, but also in the Amtrak of tomorrow which we envision as 
a highly integrated system of high speed rail transportation. We also 
endorse the concept of increasing the authorizations for direct loans, 
loan guarantees and matching grants as long as appropriate prevailing 
wage laws, retirement security laws and rail worker protections are 
applied accordingly. Access to such funding will allow for rail 
security enhancements, high speed rail development, new technology and 
upgrades at Amtrak and on freight lines and the acquisition of rolling 
stock. Overall, we will work tirelessly to ensure adequate long-term 
investments in America's rail needs, but in a manner that upholds the 
values and rights of the working men and women who form the backbone of 
the system.
    I should also add that we applaud the bipartisan efforts of both 
you, Mr. Chairman, and Ranking Member Senator McCain, for reporting out 
of this Committee an emergency security package for Amtrak. It is our 
understanding that legislation could be included as part of a port 
security package as early as this week. We believe the federal 
investments in system-wide security upgrades and critical capital 
improvements for Amtrak are essential initial elements in security 
enhancements in our national surface transportation system. We must not 
permit Amtrak's well documented security vulnerabilities to go 
unchecked a day longer.
    Mr. Chairman, let me speak to the provisions in your bill that 
directly deal with our nation's passenger rail carrier. As we witnessed 
in the days and weeks after September 11, Amtrak played an 
indispensable role in filling the void left behind by the grounding of 
all air operations. And once the airlines resumed operations, Amtrak 
continued to provide vital transportation services as travelers 
returned to flying slowly in light of well publicized aviation security 
risks. In the end, despite its precarious financial state, Amtrak 
stepped up to the challenge by adding more cars and service, honoring 
stranded airline passengers' tickets, and stretching its resources to 
implement new security systems throughout its network.
    Amtrak has always been an integral part of our transportation 
system. Never has that been so clear as it is now. However, Amtrak is 
at a crossroads. As this Committee well knows, we ask much of our 
passenger rail system. It must be all things to all people, yet we do 
not provide it with the resources it needs just to survive. For too 
long, the debate in this town about Amtrak has been about the passenger 
carrier's survival. The fact is that Amtrak has been forced to struggle 
with inadequate and unreliable resources, forcing it to direct its 
attention to survival rather than improvement and expansion.
    We've all seen the results of under investment in Amtrak: delayed 
maintenance, deferred procurement of trains and equipment, eliminated 
jobs, cuts in wages and declines in quality of service. For the 
employees of Amtrak, this has meant fewer jobs in a less desirable 
environment with wages well below those paid to workers in the commuter 
and freight sectors. However, Amtrak employees have remained dedicated 
to the promise of a brighter future for Amtrak and today continue to 
form the backbone of this national passenger rail operation.
    Improvements in Amtrak, indeed the continued viability of Amtrak 
itself, would not be but for the consistent dedication of Amtrak's 
20,000 employees. Year after year, Amtrak employees have taken the 
brunt of Amtrak's financial hardships. As a result of the sacrifices 
Amtrak workers have made in the form of real wage and benefit 
concessions, Amtrak has continued to capture a significant percentage 
of revenue from the fare box. Yet, many Amtrak workers remain the 
lowest paid in the industry. And if Amtrak is to prosper as a viable 
transportation option, it is critical that its workers be treated 
fairly not only by management, but by policymakers and others involved 
with passenger rail service. Workers and their unions must be seen as 
partners in the goal of providing safe, dependable national passenger 
rail service.
    We have long supported a balanced federal transportation investment 
policy that provides federal assistance to all modes of transportation. 
That is why transportation unions in every sector have joined together 
with their building trades union counterparts to push for investment in 
mass transit, highway, Amtrak, aviation, port and maritime programs. In 
other words, transportation labor has been out front, year after year, 
working with Congress on a bipartisan basis to make the case for 
expanded investments in the nation's transportation needs.
    That is one reason why Congress has successfully escalated the pace 
of transportation investment in recent years, culminating in enactment 
of the Transportation Equity Act for the 21st Century (TEA-21) and the 
Aviation Investment and Reform Act for the 21st Century (AIR-21). These 
landmark transportation bills made significant down payments in meeting 
America's transit, highway and aviation needs. At the same time, these 
record investments have served as a reminder that our passenger rail 
system is not receiving realistic financing levels that match the 
nation's growing expectations for Amtrak as a truly national passenger 
railroad.
    That is why we commend you, Mr. Chairman, for your commitment to 
change the tone of the debate over passenger rail. We appreciate your 
leadership in providing Amtrak with the resources it needs, in 
expanding investment opportunities for high speed rail and in ending 
the charade called operational ``self-sufficiency.'' We are especially 
pleased that RAIL-21 eliminates Amtrak's operating self-sufficiency 
requirement. This artificially imposed mandate for financial self-
sufficiency threatens to derail Amtrak's recent progress. Operational 
self-sufficiency is the wrong answer for Amtrak.
    Since its inception, Amtrak has fulfilled an important passenger 
service need. It is, therefore, in the public interest to ensure that 
Amtrak has the resources it needs to remain a reliable and sustainable 
part of the nation's multi-modal national transportation network. Yet 
Amtrak continues to carry out a specific congressional mandate to serve 
the nation's passenger rail needs but must do so with a budget that 
falls well short of meeting its needs. We applaud the provisions in 
RAIL-21 that reject the idea of a subsidy-free Amtrak, and we maintain 
that public capital funding of Amtrak should remain a long-term, 
national priority consistent with the nation's broader transportation 
priorities which we have long supported.
    We strongly endorse the emergency security authorization for Amtrak 
provided in RAIL-21. This $3.2 billion infusion will enable Amtrak to 
immediately increase security by adding new security personnel, 
surveillance capabilities, fencing and lighting, and by accelerating 
long overdue improvements to century-old tunnels on the Northeast 
Corridor and essential capacity enhancements throughout the entire 
system. While we believe that emergency spending for Amtrak is not only 
warranted but essential, we also urge this Committee to commit in the 
long-term the resources needed for Amtrak to thrive into the future.
    Mr. Chairman, if we are serious about maintaining America's status 
as the world's leader in transportation, we must tap into the potential 
of Amtrak and our entire rail system. This underachieving sector of our 
transportation system must be allowed to achieve great things at a time 
of great need for our country. Through these critically important 
investments in the security of rail and, specifically, Amtrak, we will 
not only address in a meaningful way the security vulnerabilities 
existing today in our surface transportation system, but in the long-
term we will enhance the safety and viability of our national 
transportation system at a time of tremendous need.
    We appreciate your efforts on RAIL-21, and we look forward to 
working with you to advance the principles embodied in this legislation 
to create a better Amtrak and a safer more secure workplace for 
America's rail workers.
    Thank you for your consideration of our views.

    The Chairman. Thank you very much. There is no question 
that you folks have given very valuable testimony here to the 
pending measure. It is quite to the point. You have got to 
decide whether or not you are going to have a national rail 
transportation service in the country. If you are going to 
approach the question believing passenger rail is going to make 
a profit, with winners and losers, and start measuring it that 
way, then you are not going to get anywhere. It is not going to 
happen. It is just not going to happen.
    Yes, we have to be very careful and conservative, and just 
not throw money away. We have got to have good people like Mr. 
Warrington in there and trust them, and audit them, and see 
where there is waste, or where there are chances to save money 
or to expand service. But the basic question is whether or not 
we are going to have a national rail system for passengers in 
America, and obviously I forced this particular hearing because 
I believe in it.
    Many Senators are interested in electric power, and the 
building of dams. I have got water coming out of my ears where 
I live. Why should I support federal funding to build a dam to 
get water down to the Southwest and divert rivers and 
everything else? Because it is in the national interest. The 
same with electric power and everything else of that kind.
    It is a disgrace to not have a national rail system, and as 
far as money, I tried to save our taxpayers 40 billion. Their 
$600 tax rebate is not going to stimulate anything. I put in a 
bill to repeal it because I had put in the bill to provide it. 
I got three votes. I can show you all kinds of savings we could 
generate. Right now, we are going to be throwing money around 
for so-called tax cuts.
    We ended last month, the end of fiscal year 2001, we ended 
with a $133 billion deficit. I wish the media would report the 
truth. I will show them the figures from the Department of 
Treasurey. It is not a surplus. All these records of the 
deficit going down, and reports of the surplus, there never has 
been a surplus since Lyndon Johnson in 1968-1969. The year 
before was $23.6 billion deficit, not a surplus, and 133 
billion just last month.
    Already this year the deficit has increased. The Government 
has gone into the red to the tune of 15 billion, and we have 
not gotten any stimulus bill going. We have not put the monies 
up for agriculture, defense, education, and all the other 
things we are going to fund. We have not had the impact of the 
$15 billion we already voted for the airlines. So mark it down, 
as of November 1, we announced that this particular Committee, 
that the deficit for fiscal year 2002 will exceed $300 billion, 
so we have got plenty of stimulus.
    What we really need to be doing is getting into the 
security needs and the domestic homeland security, the airline 
security, rail security, seaport security, vaccines, public 
health, back at the State level.
    We have got $20 or $25 billion in unemployment 
compensation. We have got to get that in, health care, Mr. 
Wytkind, we have got to get that in. We have got about $25, 
maybe $30 billion, but not $75 or $100 billion in tax cuts and 
that kind of nonsense and call it stimulus. It is an 
unconscientious raid on the Treasury, and people ought to be 
ashamed to be even calling that a stimulus. It is not going to 
stimulate anything.
    So you folks gave us the best testimony as to what we need 
in the country. Is there any particular comment or improvement 
that you can make to S. 1530? That is what we are looking for. 
Does anybody say that there is something really wrong in this 
bill, or something that we really should include, or not 
include?
    Mr. Wytkind. I might, Mr. Chairman, very briefly, as we 
said, we are strongly in support of this legislation, but want 
to be sure that before it becomes law, that basic employee 
rights, both for railroad workers and the protections they have 
always had in the law, as well as, of course, prevailing wage 
protections, which we have always fought for, together with the 
building and construction trades labor movement, is included in 
the legislation. As all federal financing mechanisms passed by 
Congress for the last 50 years have always included, so that 
would be the only point I would raise, but substantively what 
you have done here is something that we are going to very 
vigorously get behind.
    The Chairman. Very good. Anyone else?
    Senator Cleland.
    Senator Cleland. Thank you very much, Mr. Chairman. I thank 
our panelists. I stayed because I wanted to give a kudo to Mr. 
Warrington.
    Thank you for hanging in there and fighting this fight, for 
taking the slings and arrows of outrageous fortune, and 
particularly some in this Committee. Thank you for just hanging 
in there with your basic position that we need a system here in 
this country, an intercity rail system, a high-speed rail 
system, and that that is what will help stimulate our economy, 
aid our national security, ease congestion, and in many ways be 
part of the solution to so many challenges we face, so thank 
you for hanging in there.
    Mr. Wytkind, thank you for your emphasis and expertise in 
terms of understanding that the best economic recovery move, 
one of the best economic recovery moves we could make is to 
invest in our infrastructure.
    When I was in college, I learned that there was at least a 
three to five multiplier effect for every federal dollar spent 
on infrastructure, so if we were of a mind to dramatically 
involve ourselves in partnership with our states, and I 
mentioned earlier that 32 states are already moving in this 
direction, my state included. We could do a lot to ease the 
burden of our economy, our economic struggles, employ people, 
move freight and people, and otherwise help our country.,
    I think since September 11 we are in a new era here. We 
have a war abroad, and a war in terms of homeland security 
here, and a third war, a war fighting to regain our economic 
strength. I think in all of those three wars, revitalizing our 
rail infrastructure helps us win. It helps us be successful, 
and so I think it is a much broader question than just one or 
two Senate bills. I think it has to do with the future of the 
country, and with what kind of society we want to build.
    I will say that in my own home state I look back and for 
most of the 19th Century, beginning in the 1830's, my state, 
without federal assistance, invested in rail, the first major 
public project in the history of my state was in the 1830's, 
and it was called the Georgia Railroad.
    Why did they build a Georgia railroad? For all the reasons 
we would expand railroad infrastructure today, all the same 
reasons, and my little home town was one of many that grew upon 
that railroad, and that town still exists, and the railroad 
still goes through that town today. It used to move people as 
well as freight. Now it just moves freight. So many little 
towns have died along the way.
    We had the interstate system, which was a positive thing, 
and economic development went toward that throughout our state. 
You can look at the interstate system, and it is the economic 
spinal column of growth in Georgia, the same thing with so many 
states in our country.
    I cannot help but think that if we boosted the rail 
infrastructure, freight and passenger, in this country we would 
spark economic growth in areas of our country we have abandoned 
and forgotten about. We would have a rebirth of employment of 
opportunity, of travel and trade and tourism like unto which we 
cannot even imagine, so I this is a key question for our 
country, for our economy, for our national security, and that 
is one reason why I am proud to be an original cosponsor of 
both the pieces of legislation we are talking about.
    Thank you, Mr. Chairman.
    The Chairman. You are right on target. I just have to 
comment, with you talking about the effort in Georgia, the 
first railroad in all of America was from Charleston to 
Hamburg, Charleston, South Carolina to Hamburg, now known as 
Augusta, Georgia.
    Senator Cleland. And the Georgia Railroad was built to 
connect with your great state from Atlanta to Augusta.
    The Chairman. We have to continue the leadership. I think 
there is one good change. We could change the title of your and 
my bill here to the National Defense Rail Act.
    [Laughter.]
    The Chairman. Thank you, all four of you here, for your 
patience and understanding. The record will stay open for 
questions. The Committee will be in recess subject to the call 
of the chair.
    [Whereupon, at 12:00 noon, the Committee adjourned.]

                            A P P E N D I X

   Prepared Statement of Ross B. Capon, Executive Director, National 
                   Association of Railroad Passengers

    Thank you for the opportunity to present this information. Our non-
partisan organization has worked since 1967 in support of more and 
better passenger trains of all types in the U. S.
    Mr. Chairman, thank you for all of your work on behalf of intercity 
passenger rail. We appreciate the strong initiative on your part that 
S. 1530 represents. Thank you for incorporating the $3.2 billion 
emergency funding for Amtrak. One element that this could fund is of 
particular interest to our board members: the ability at a modest cost 
to restore to service many modern Amtrak cars now awaiting repairs.
I. Success Stories
    For the Amtrak system as a whole, FY 2001 saw ridership rise to a 
record 23.5 million; this was the fifth straight year in which 
ridership grew. Similarly, travel, measured in passenger-miles (one 
passenger traveling one mile), rose for the fifth straight year, to 
5.56 billion. (The latter figure is not a record, due to reductions in 
the size of Amtrak's long-distance network.)
    In October, the first full month following the terrorist attacks, 
ridership was down 1%, while the Air Transport Association reported 
domestic passenger boardings fell 22%. These numbers imply growth in 
Amtrak's market share. Acela Express/Metroliner ridership was up 
substantially. Sleeping-car demand also was strong, though ridership in 
this category fell because of capacity reductions (vs. 2000) and 
because rooms occupied last year by couples traveling on discount fares 
often were replaced this year with single business travelers paying 
higher fares. The Pacific Surfliner service in southern California 
posted its highest October ridership in eight years.
    Below I discuss several (but not all) of the success stories that 
have resulted from Amtrak/state/railroad partnerships. Some critics of 
Amtrak and the current structure suggest that all of these 
accomplishments could have happened without Amtrak. That is 
speculation. What is clear is that these accomplishments were a product 
of the existing structure, including the law that gives Amtrak access 
to the freight railroads under specific terms. It should be equally 
obvious that the key to the future success of passenger rail under any 
structure is adequate funding.

California
    The improvements described below reflect an extraordinary 
commitment by the State of California and its localities, and their 
superb partnership with Amtrak and the freight railroads (which own 
much of the trackage). The state has invested in rolling stock, 
stations and track improvements, including track capacity enhancements. 
Freight operations also benefited from much of this work.
    A superb feeder-bus network enhances ridership on the California 
corridors. This network includes not only the heavily traveled 
Bakersfield-Los Angeles link but also a dense network of connections to 
many smaller markets. When Amtrak began in 1971, California corridor 
service consisted of just three Los Angeles-San Diego roundtrips. 
Today, there are 25 intercity roundtrips (11 Surfliner, five San 
Joaquin, and nine Capitol). On the commuter-rail side, the southern 
California network has grown from a single round-trip in 1990 to a 
significant network that includes about 2.5 million annual trips on the 
Los Angeles-San Diego segment alone. There has also been significant 
commuter-rail growth in the Bay Area.
    On the Capitol Corridor linking Sacramento with the Bay Area, 
ridership grew 193% from 366,800 in FY 1994 to 1,073,400 in FY 2001. 
This is all the more impressive when one considers that this service 
only started in 1991. Again, increased frequencies and more modern 
equipment have been crucial. The number of daily round-trips on the 
main segment (Sacramento-Oakland) grew from three in the May 1994, 
timetable to nine in the September 2001, timetable.
    On the San Joaquin Corridor between Bakersfield (bus connections to 
southern California) and Oakland/Sacramento, ridership grew 28% from 
554,500 in FY 1994 to 712,100 in FY 2001.
    The Pacific Surfliner route (San Diego-Los Angeles-Santa Barbara) 
had 1,716,400 riders in FY 2001, up 5% from the FY 1994 level of 
1,629,300. However, Amtrak figures tell only part of the story of the 
growth in rail usage on this line. First, we understand that 
overcrowding mainly on weekends has created situations where many 
tickets were not collected and thus riders not counted.
    More importantly, county-sponsored commuter rail operations which 
did not even exist on the line before 1990 have grown dramatically and 
now account for about 2.6 million riders a year. Starting with a 
single, Orange-County-sponsored, Amtrak-operated Los Angeles-San Juan 
Capistrano rush-hour train April 30, 1990 (extended to Oceanside in 
May, 1994), commuter rail serving the Amtrak stations plus additional 
stations mushroomed into the huge Metrolink operation of today. 
February 27, 1995, saw start-up of the ``Coaster'' service on the 
southern end of the line (San Diego-Oceanside). Coaster ridership in 
1999 was 1.2 million and last year daily ridership on Metrolink's 
Orange County line was 5,670 (roughly 1.4 million a year).

New York
    The Empire Corridor in New York has become solidly established even 
among business travelers, although achieving significant market share 
west of Albany obviously will require faster service, increased 
frequencies and reduced fares. For Albany businesspeople going to New 
York City, the train is by far the first choice. Overall, Empire 
Corridor ridership was 1,071,400 in 1994 and 1,093,600 in fiscal 2001. 
Amtrak deserves credit for adding frequencies, which is a factor in the 
ridership growth.
    The State of New York has committed over $100 million for service 
upgrades including refurbishing seven turboliner train sets, double-
tracking the 17-mile bottleneck between Albany and Schenectady, and 
raising top speeds to 125 mph on part of the route south of Albany. The 
state is currently developing a master plan for specific improvements 
and is involving all users of the tracks in the process.
    Unfortunately, three years after Gov. Pataki announced $185 million 
program shared equally by Amtrak and the State, no results are visible. 
The chief problem now is the failure of the state to enact tax relief 
for New York's extraordinarily high and discriminatory rail property 
tax. Understandably, CSX will not allow passenger improvements to their 
line that increase its value and their property tax burden. Legal 
efforts aimed toward tax reform by CSX and other Class One lines are 
underway, but could take years to proceed through the courts.
    The Empire Corridor desperately needs additional equipment. New 
York State funded refurbished turboliners could provide this. Despite 
being displayed since August 2000, the New York State Department of 
Transportation still has no current date for their possible 
introduction for revenue service. Engineering design defects and the 
need for numerous modifications continue to be addressed slowly by the 
manufacturer, Super Steel Schenectady.

North Carolina
    North Carolina has mounted a solid program that includes sponsoring 
two passenger trains, highway/railroad grade crossing improvements, 
intermodal terminal development and plans for significant track 
improvements and speed reductions. Ridership on the New York-Richmond-
Raleigh-Charlotte Carolinian was 206,400 in 1994 and 242,400 in FY 
2001. This is a single daily round trip; one-way route mileage is 702. 
A high proportion of riders on this train are making fairly long trips. 
At a February 1, 2000, meeting on Capitol Hill to announce formation of 
the States for Passenger Rail Coalition, David King of North Carolina 
DOT said ``two-thirds of the people who board our trains want to go to 
the Northeast Corridor.''
    A second train, running only between Raleigh and Charlotte, was 
added during FY 1995. FY 1996 ridership was 29,100; in FY 2001 it was 
50,600.
    The state has a major station improvement program, which has helped 
ridership and will do so even more in the future.

Pacific Northwest
    On the Pacific Northwest Corridor between Eugene, Oregon, and 
Vancouver, British Columbia, annual ridership grew 195% from 226,000 in 
FY 1993 (first year of the Amtrak/State of Washington partnership) to 
666,700 in fiscal 2001, in spite of modest train speeds. (These 
ridership figures include relevant short-distance travelers on long-
distance trains. FY 2001 was up 8.3% over FY 2000.) The major factors 
that explain this growth:

   Modern, Talgo trains

   Modest reduction in Seattle-Portland running time for the 
        corridor trains from 3:55 (average speed: 47.5 mph) to three 
        and a half hours (average speed 53.1 mph)

   Modest increase in frequency of Seattle-Portland corridor 
        trains from one to three (total departures including long-
        distance trains from three to four)

   Modest service expansion north and south of those two cities 
        (Portland-Eugene service doubled from one to two daily round-
        trips; Seattle-Bellingham went from zero to two, one of which 
        continues on to Vancouver, B.C.)

   Increased highway congestion and higher gasoline prices.

    While this service is nowhere near European or Japanese standards, 
it is more frequent than at any time since 1957, and the average speed 
for the fastest trains is higher than at any point in the last 50 years 
(except during 1971 when Amtrak achieved this speed but at a cost of 
dropping three intermediate stops).
    If that kind of ridership growth can be obtained with modest 
improvements in speed and frequency, it is reasonable to expect that 
significant improvements would generate dramatic ridership 
improvements. Indeed, state plans--which are dependent on a federal 
funding partnership--envision over two million riders in the year 2018, 
based on reducing Seattle-Portland trip times to 2\1/2\ hours and 
increasing frequencies to 13 daily Seattle-Portland round trips. If the 
High Speed Rail Investment Act is passed, the Washington State DOT 
plans to accelerate the improvement program to complete the program in 
as soon as 10 years--still painfully slow by our standards.

U. S. Postal Service Contracts
    Amtrak's longstanding relationship with the Postal Service has 
greatly benefited the bottom line, particularly of the long-distance 
trains. Amtrak's FY 2000 revenues were $96.1 million (annual report, 
page 20), and we understand that Amtrak ``earns a 30% margin on sales'' 
(Strategic Business Plan, FY 1999-2002, published October 12, 1998, 
page 33).

Midwest
    This really is a success story to come. Progress has been much 
slower here than elsewhere. The Midwest Regional Rail Initiative aims 
to change that, and some notable progress has occurred:

   Amtrak and St. Louis finally have agreement on plans for a 
        long-awaited intermodal terminal in that city, which will 
        increase Amtrak's visibility as well as permit convenient 
        transfers between Amtrak and the region's highly successful 
        light rail line. Amtrak's inconveniently located ``temporary'' 
        St. Louis station has been a major obstacle to ridership 
        development.

   Testing is well advanced on a signal system on the Amtrak-
        owned third of the Chicago-Detroit line that will permit 110 
        mph operation.

   Wisconsin has plans for a new passenger-train station at 
        Milwaukee's Mitchell Field, to begin to tap the huge market of 
        travelers that would like to follow the European model of easy 
        transfer between air and rail travel.

   The Wisconsin DOT on June 12 released a favorable 
        Environmental Assessment for the proposed Milwaukee-Madison 
        line, which is envisioned as eventually extending to the Twin 
        Cities. On the 85-mile Milwaukee-Madison segment, travel time 
        is projected at 1:07 (average speed 76.1 mph; top speed 110 
        mph). Testimony at recent hearings on the Environmental 
        Assessment was very positive, with a clear majority of speakers 
        in favor of developing the rail line. People in cities near the 
        rail line are increasingly seeing fast, frequent train service 
        as a strong asset to their communities.

II. Elements of Success
    In most of the above cases, states have provided significant 
capital and operating support. To the extent that operating support has 
helped keep fares lower, this support has helped increase ridership. 
Indeed, whenever Amtrak is criticized for not showing more dramatic 
ridership growth in recent years, it should be noted that the 1997 
Amtrak reauthorization sent a pretty clear message (a misguided one, in 
our view) that improvement to the bottom line was to be a higher 
priority than ridership growth. Consequently, ridership growth has come 
against a backdrop of pressure to increase fares, even on state-
supported trains. For example, our New York members are concerned that 
pricing in the New York-Albany market has all but eliminated family and 
leisure travel. On the line west of Albany, where low airfares are now 
a major factor, our members think Amtrak has been slow to react and 
lower its own fares. They also feel that extension of a daytime train 
to Cleveland and restoration of an overnight train to Toronto would 
help develop markets where such competition is not a factor.

III. High Speed Rail
    We strongly support the High Speed Rail Investment Act (HSRIA) or 
any practical plan for enabling the federal government to partner with 
states in developing air-competitive rail corridor services. Most of 
this work will be upgrading lines that already have Amtrak service. As 
noted above, some of these lines already have experienced significant 
ridership increases based on very modest improvements in running time.
    One criticism of the HSRIA which we have heard is the high price 
tag for a ``complete build out'' of all of the Northeast Corridor and 
all of the federally designated high speed rail corridors around the 
country, and the fact that such a price tag is well beyond the 
resources in the HSRIA. A recent news report cited ``preliminary Amtrak 
estimates of $50 to $70 billion over 20 years.''
    We do not see this as a problem. First, the 20% state match 
requirement will help insure that the most useful and economically 
viable projects get funded; intercity passenger rail money is hard 
enough to get to offer assurance that states are not going to ``waste'' 
it on low-priority projects. Second, in general, each small investment 
in this program is going to produce tangible benefits, such as 
reduction in rail travel time by a given number of minutes, and/or 
improved safety at certain grade crossings. Therefore, if a decision is 
made to stop the investment process before a corridor is ``fully 
developed,'' the money spent up to that point would not have been 
wasted. Finally, it is obviously our expectation and hope that--just as 
the modest projects described above have created enough new ridership 
to build political support for further investment--so also will future 
investment projects further expand the high-speed rail constituency, 
enabling significant investments beyond those possible under the HSRIA.
    We think it is a national disgrace that no state partnership 
program exists currently and that, in effect, there is no mechanism to 
reflect rail's ability to let the U.S. avoid certain costly, disruptive 
aviation investments. We understand that direct appropriations likely 
would cost less, but they are effectively ``off the table.'' The small 
gap between ``fire-walled'' highway and aviation trust fund dollars and 
total resources available to the transportation appropriations 
subcommittee means it is always a struggle to fund Amtrak's core 
system, as well as the Coast Guard and FAA operations.
    The HSRIA is not an Amtrak bailout. A June 25 General Accounting 
Office report describes various concerns about S.250, the first version 
of the HSRIA introduced this year. H.R.2329 addresses most of the 
concerns described in this report, and some of them also have been 
addressed in a newer version of the Senate bill that is expected to 
form the basis for initial action in that body.

IV. Long-distance trains
    The long-distance trains account for the majority of Amtrak's 
route-miles and passenger-miles (a passenger-mile is one passenger 
carried one mile). These trains are important to people who live in or 
try to reach small communities where alternate public transport does 
not exist, does not go to the right place, or is unaffordable. They are 
essential to people who don't like to fly or cannot fly for medical 
reasons, permanent or temporary. They often provide superior facilities 
for physically challenged passengers. Those who like an unparalleled 
view of America's physical beauty appreciate these trains, and they 
appeal to those who want a break from the fast-lane world of commercial 
aviation.
    Long distance trains are the melting pots of U.S. and Canadian 
transportation, carrying passenger railroading's lowest-income riders 
(long-distance coach travelers) and some of its wealthiest (in deluxe 
sleeping accommodations). Coach passengers account for about 84% of the 
riders on these trains, and about 76% of the passenger-miles traveled.
    These trains help glue the system together physically, facilitating 
the ferrying of corridor (and commuter rail) equipment around the 
nation. They also facilitate future efforts to build air-competitive 
corridors and commuter rail service. A downtown commuter rail station 
is not easy to start from scratch--witness the painful efforts to 
recreate one in Atlanta--so having it in place is a big help.
    We are encouraged at a growing consensus on the need to expand and 
improve service in regional corridors. Certainly, the short to medium 
distance travel market is important. Data from the Bureau of 
Transportation Statistics show that 80% of all travel involves trips 
shorter than 500 miles. (Trips over 1,000 miles represent less than 10% 
of all trips but account for nearly 45% of all passenger miles.) But 
BTS data also shows that only one-third of all travel is between the 
130 or so largest metropolitan areas. Another third is between these 
large metropolitan areas and smaller cities and towns; the final third 
is entirely among smaller communities. Limiting train service to 
regional corridors will not serve the mobility needs of the American 
public. Imagine the limited utility of the Interstate highway system if 
roads had only been built in densely populated areas.
    Rail is not just a congestion solution. It is a mobility solution 
and a quality of life enhancement. Transportation choice lets people 
decide what form of transportation best suits their individual needs 
and circumstances. Since rail offers the specific advantages noted 
above, our transportation system must have a strong rail component in 
order to serve a broad range of individual mobility needs adequately. 
For the national rail passenger system to perform this role, it must 
connect regional corridors with inter regional links to maximize the 
number of origin and destination pairs served.
    Long distance can be an efficient and cost effective way to provide 
these links and to serve major travel corridors in less densely 
populated areas. Consider, for example, the Coast Starlight, on the 
1,389-mile Seattle--Los Angeles route, directly serving 29 cities (and 
406 different origin-destination choices). It also connects regional 
corridor services in the Pacific Northwest, Northern California and 
Southern California, and connects with other long distance routes in 
Portland, the Bay Area and Los Angeles. By linking so many different 
services, this one route makes rail travel available for literally 
thousands of possible trips. The Coast Starlight is the only train 
running the length of its route, and freeways and low fare air service 
parallel it. Nonetheless, the Starlight attracts more than 730 
passengers a day.
    While Amtrak's route map gives the appearance of an extensive 
national system, the reality is that the network is skeletal. There are 
just 16 long distance routes, only one of which has more than a single 
daily round-trip, and there is a severe sleeping-car shortage. Yet 
every day, nearly 11,000 people choose a long distance train instead of 
flying or driving. While this number pales in comparison to the number 
of people who fly, so does the size of Amtrak's system. If we end the 
long distance trains, we will eliminate the ability of nearly four 
million passengers a year to make a choice that works best for them.
    Most statements about losses incurred by long-distance trains do 
not represent the impact on system costs if the given train is 
eliminated. Many of the overhead costs would not go away, they would 
simply be reallocated to other trains. An Amtrak report of February 28, 
2000, said ``shrinking the network would hurt, not help, Amtrak's 
bottom line . . . The overall financial performance of the network 
declines if Amtrak were to cut single routes.'' Similarly, Federal 
Railroad Administrator Allan Rutter said--when addressing our board of 
directors in Dallas on October 19--``we learned that incremental 
cutting of routes does not work.''
    Long distance trains also perform important non-passenger 
functions, including the carriage of mail (see ``Success Story'' 
section on page 5), most of which would have gone by truck absent 
Amtrak. The express business, also conceived to improve Amtrak's long-
distance economics, had a rough start, with too much emphasis on 
revenue and not enough on cost. Amtrak's appointment last year of Lee 
Sargrad as President--Mail and Express appears to reflect a strong 
focus on enabling express, like mail, to make a significant 
contribution to the bottom line while relieving highways of some truck 
traffic.
    There also are benefits for the freight railroads. Amtrak has been 
a leader in improving grade crossing safety, particularly in Florida, 
where it only runs long distance trains. Finally, Amtrak's express 
initiative appears to have inspired freight railroad efforts to recover 
some of the time-sensitive cargo lost to trucks years ago. Motorists, 
public safety, and energy efficiency generally benefit when cargo 
switches from road to rail.

                                  
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